Q2 2024 Upbound Group Inc Earnings Call

To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today.

Operator: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jeff Chesnut, Head of IR. Please go ahead.

Operator: Please be advised that today's conference is being recorded.

Jeff Chesnut: I would now like to hand the conference over to your first speaker today.

Mitch Fadel: Just Chesnut, head of IR, please go ahead. Good morning, and thank you all for joining us to discuss the company's performance for the second quarter of 2024. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website and investors.

Jeff Chesnut, Head of IR. Please go ahead.

Jeff Chesnut: Good morning, and thank you all for joining us to discuss the company's performance for the second quarter of 2024. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at www.investor.upbound.com.

Mitch Fadel: On the call today from Upbound Group, we have Mitch Fadel, our CEO, and Fahmi Karam, our CFO. As a reminder, some of the statements provided on this call are forward-looking in our subject of factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's SEC filings. Upbound Group undertakes no obligations to publicly update or revise any forward-looking statements except as required by law.

Jeff Chesnut: On the call today from Upbound Group, we have Mitch Fadel, our CEO, and Fahmi Karam, our CFO. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's SEC filing. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

Speaker Change: These factors are described in our earnings release as well as in the company's SEC filings. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

Mitch Fadel: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliation to the most comparable GAAP financial measures.

Jeff Chesnut: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. Please refer to our website for the only authorized webcast.

Mitch Fadel: Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties.

Mitch Fadel: Please refer to our website for the only authorized webcasts.

Jeff Chesnut: With that, I'll turn the call over to Mitch. Thank you, Jeff, and good morning everyone on the call today. I'll begin with a review of the key highlights from the second quarter, then I'll hand it off to Fahmi for a more detailed review of our financial results and our financial outlook. And after that, we'll take some questions.

Mitch Fadel: With that, I'll turn the call over to Mitch. Thank you, Jeff, and good morning everyone on the call today. I'll begin with a review of the key highlights from the second quarter, then I'll hand it off to Fahmi for a more detailed review of our financial results and our financial outlook. And after that, we'll take some questions. We're very pleased with the results from the quarter, which included revenues of nearly $1.1 billion, adjusted EBITDA of approximately $125 million, and non-GAAP earnings per share of $1.4. Our concentrated focus on execution paid off with random centers revenue up nearly 2% against the prior year, and it seems as revenue up 19%.

Speaker Change: Thank you Jeff and good morning everyone on the call today. I'll begin with a review of the key highlights from the second quarter then I'll hand it off to Fahmi for a more detailed review of our financial results and our financial outlook and after that we'll take some questions.

Mitch Fadel: We are very pleased with the results from the quarter, which included revenues of nearly $1.1 billion, adjusted EBITDA of approximately $125 million, and non-gap earnings per share of $1.04. Our concentrated focus on execution paid off, with Ren and Sen's revenue up nearly 2% against the prior year, and Acima's revenue up 19%. Consistent with prior quarters, these results were driven by a steady focus on performance at both segments

Our concentrated focus on execution paid off, with Ren and Sen's revenue up nearly 2% against the prior year and Acima's revenue up 19%.

Mitch Fadel: Consistent with prior quarters, these results were driven by a steady focus on performance at both segments. A SEMA continued its strong momentum with growth in merchant count, enhanced productivity of our existing merchants in a growing contribution from a SEMA's direct to consumer e-commerce channel. Our lease charge also were in line with our expectations that the SEMA finished the quarter at 9.6%, and Renison are slightly better than expected at 4.2%. We also delivered strong sequential improvement in the SEMA's adjusted EBITDA margin to 14.7% compared to 11.6% in the first quarter, which we'll discuss in a little more detail later in the presentation.

Mitch Fadel: ACIMA continued its strong momentum with growth in merchant count, enhanced productivity of our existing merchants, and a growing contribution from a seamless direct-to-consumer e-commerce. Our lease charge-offs were in line with our expectations as Acima finished the quarter at 9.6%, and Renasant was slightly better than expected at 4.2%. We also delivered strong sequential improvement in CIMA's adjusted EBITDA margin to 14.7%, compared to 11.6% in the first quarter, which we'll discuss in a little more detail later in the presentation.

Acima continued its strong momentum with growth in merchant count, enhanced productivity of our existing merchants, and a growing contribution from Acima's direct-to-consumer e-commerce channel.

Our lease chargeouts were in line with our expectations as Acima finished the quarter at 9.6% and Renison are slightly better than expected at 4.2%.

Speaker Change: We also delivered strong sequential improvement in the SEMA's adjusted EBITDA margin to 14.7% compared to 11.6% in the first quarter, which we'll discuss in a little more detail later in the presentation.

Mitch Fadel: With these results, and based on our current expectations for the balance of the year, we're raising the midpoint of our previous guidance for revenue, adjusted EBITDA, and non-GAAP diluted EPS. So before we review our SEMA results, let's discuss some of the enterprise-wide themes we've seen across the past quarter. The economic backdrop for our businesses' quarter continues to evolve. Unemployment is higher to the 4% area, and, well, still low by historic standards. It's up from the 54-year low of 3.4% in April of last year.

Mitch Fadel: With these results, and based on our current expectations for the balance of the year, we're raising the midpoint of our previous guidance for revenue, adjusted EBITDA, and non-GAAP diluted EPS. So before we review our segment results, let's discuss some of the enterprise-wide themes we've seen across the past quarter. The economic backdrop for our business this quarter continues to evolve. Unemployment edged higher to the 4% area and is still low by historic standards.

With these results and based on our current expectations for the balance of the year, we're raising the midpoint of our previous guidance for revenue, adjusted EBITDA, and non-GAAP diluted EPS.

So before we review our segment results, let's discuss some of the enterprise-wide themes we've seen across the past quarter.

Mitch Fadel: It's up from the 54-year low of 3.4% in April of last year. We also monitor inflation levels, especially in categories like rent and food and fuel. And we're pleased to see June's headline CPI, which was the first negative month-over-month increase in four years. That will be welcome news to our consumers, since inflation can have a larger impact on lower income households. Other factors like credit card debt and delinquencies, hard goods demand, BNPL balances, and election uncertainty mean that the lower-income consumer is confronting a blizzard of economic variables.

The economic backdrop for our business this quarter continues to evolve.

Speaker Change: Unemployment edged higher to the 4% area and while still by still low by historic standards.

Mitch Fadel: in texture. We also monitor inflation levels, especially in categories like rent and food and fuel, and we're pleased to see June's headline CPI, which was the first negative month-over-month print in four years. That will be welcome news to our consumers since inflation can have a larger impact on lower-income households. Other factors like credit card debt and delinquencies, hard goods demand, BNPL balances, and election uncertainty mean that the lower income consumers confronting a blizzard of economic barriers. But that's nothing new for our consumers. They're being delivered in their spending choices as they seek value and flexibility while working to stretch their incomes.

Mitch Fadel: But that's nothing new for our consumers. They're being deliberate in their spending choices as they seek value and flexibility while working to stretch their income. So it's not surprising to see more reports of trade-down activity, especially when factoring in the ongoing uncertainty over the credit card late-fee regulation. As the credit lenders above us and merchant waterfalls have implemented mitigating actions, we believe some have also further adjusted underwriting, which can then introduce new consumers to lease-owned solutions.

Speaker Change: But that's nothing new for our consumers.

They're being deliberate in their spending choices as they seek value and flexibility while working to stretch their incomes.

Mitch Fadel: So it's not surprising to see more reports of trade-down activity, especially when factoring in the ongoing uncertainty over the credit card late fee regulations. As the credit lenders above us in merchant waterfalls has implemented mitigating actions, we believe some of also further adjusted underwriting, which can then introduce new consumers to least on solutions. Although the read through isn't exact, we're seeing recent trends of more applicants and higher scoring applicants on average, especially in our SEMA segment. Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this new dynamic environment to achieve reasonable risk levels while continuing to focus on sustainable and profitable earnings growth.

So it's not surprising to see more reports of trade-down activity, especially when factoring in the ongoing uncertainty over the credit card late fee regulations.

Mitch Fadel: Although the read-through isn't exact, we are seeing recent trends of more applicants and higher-scoring applicants on average, especially in our SEMA segment. Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this dynamic environment to achieve reasonable risk levels, and we will continue to focus on sustainable and profitable earnings growth. As this particular economic cycle evolves, we believe our business will be well positioned for continued success. As someone who's been around this business for a long time, over four decades in the industry and with this company, I've seen all variations of cycles, and I know that our business and our value proposition are not only durable, but resilient.

Speaker Change: Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this dynamic environment to achieve reasonable risk levels while continuing to focus on sustainable and profitable earnings growth.

Mitch Fadel: As this particular economic cycle evolves, we believe our business will be well positioned for continued success.

Speaker Change: As this particular economic cycle evolves, we believe our business will be well-positioned for continued success.

Mitch Fadel: As someone who's been around this business for a long time, over four decades in the industry and with this company, I've seen all variations of cycles. Tonight, I know that our business and our value proposition is not only durable, it's resilient. Our consumers appreciate the low, predictable payments that fit within their budget and the flexibility to continue to renew their short term leases to acquire ownership, to exercise and really purchase option and save, or just terminate the contract at any time without penalties. Or even terminate and reinstate as their circumstances warrant. And we're truly on the channel with a differentiated model across both of our main segments that enables us to meet the customer where and when they're ready to shop.

Mitch Fadel: Our consumers appreciate the low predictable payments that fit within their budget and the flexibility to continue to renew their short-term leases to acquire ownership, to exercise an early purchase option and save, or just terminate the contract at any time without penalties, or even terminate and reinstate as their circumstances warrant. And we're truly omnichannel with a differentiated model across both of our main segments that enables us to meet the customer where and when they're ready to shop. Our online presence offers convenience and selection, while the in-store experience offers key values like seeing and testing out the products while building a relationship with our neighborhood-based store.

Speaker Change: Our consumers appreciate the low predictable payments that fit within their budget and the flexibility to continue to renew their short-term leases to acquire ownership, to exercise an early purchase option and save.

Speaker Change: And we're truly omni-channel with a differentiated model across both of our main segments that enables us to meet the customer where and when they're ready to shop.

Mitch Fadel: Our online presence offers convenience and selection, while the in-store experience offers key values like seeing and testing out the products will build a relationship with our neighborhood-based store teams. For our retail partners, we can deploy our staff model, which puts in a seem-a-leasing subject matter expert in their stores and can drive significant improvements and conversions. Supporting all of these channels and team members are our centralized support functions, where we optimize underwriting, account management, marketing, and operations across the company to minimize cost and maximize efficiency, while supporting our business units and delivering value to our retail partners and our customers.

Speaker Change: Our online presence offers convenience and selection, while the in-store experience offers key values like seeing and testing out the products while building a relationship with our neighborhood-based store teams.

Mitch Fadel: For our resale partners, we can deploy our staff model, which puts a SEMA leasing subject matter expert in their stores and can drive significant improvements in conversion. Supporting all of these channels and team members are our centralized support functions, where we optimize underwriting, account management, marketing, and operations across the company to minimize cost and maximize efficiency, while supporting our business units and delivering value to our retail partners and our customers.

Speaker Change: For our resale partners, we can deploy our staff model, which puts in a SEMA leasing subject matter expert in their stores and can drive significant improvements in conversions.

Speaker Change: Supporting all of these channels and team members are our centralized support functions where we optimize underwriting, account management, marketing, and operations across the company to minimize costs and maximize efficiency while supporting our business units and delivering value to our retail partners and our customers.

Mitch Fadel: Importantly, we have scale, both with our 2000 plus branded stores and our 35,000 plus partner locations. The business model has been built and tested for over 50 years now, and in uncertain times like these, scale and liquidity are critical to manage through the headwinds and position the company for long-term success in the environment. So the business is counterbalanced, with an algorithm that supports profitable returns across economic sectors. Leaner macroeconomic cycles generally increase our business opportunities through trade down. Well, more robust economies with healthy labor markets will generally see all cohorts performing better in generating lower losses.

Mitch Fadel: Importantly, we have scale both with our 2,000 plus branded stores and our 35,000 plus partner locations, and the business model has been built and tested for over 50 years now. In uncertain times like these, scale and liquidity are critical to manage through the headwinds and position the company for long-term success as the environment improves. So the business is counter-balanced with an algorithm that supports profitable returns across economics.

Speaker Change: both with our 2,000-plus branded stores and our 35,000-plus partner locations. And the business model has been built and tested for over 50 years now.

Speaker Change: Uncertain times like these, scale and liquidity are critical to manage through the headwinds and position the company for long-term success as the environment improves.

Speaker Change: So the business is counterbalanced.

Mitch Fadel: Michael's. Liner, macroeconomic cycles generally increase our business opportunities through trade-down, while more robust economies with healthy labor markets will generally see all cohorts performing better in generating lower losses, and that's how we deliver nearly 10% top-line growth this period with a consolidated loss rate that's in line with our expectations and geared out to my profitable returns.

Speaker Change: While more robust economies with healthy labor markets will generally see all cohorts performing better and generating lower losses.

Mitch Fadel: And that's how we deliver nearly 10% top line growth this period with a consolidated loss rate that's in line with our expectations and geared to optimize profit. Now, let's walk through the details behind our segment financial results on slide four. Starting with the SEMA, we achieved our third consecutive quarter of GMV growth in the 20% range, with an improvement of 21% in this most recent quarter. During the stimulus period in 2021, we achieved a new record for the highest second quarter GMV that the CMIS has ever recorded.

Speaker Change: And that's how we deliver nearly 10% top-line growth this period with a consolidated loss rate that's in line with our expectations and geared to optimize profitable returns.

Mitch Fadel: Now let's walk through the details behind our segment financial results on slide four. Starting with a SEMA, we achieved our third consecutive quarter of GMV growth in the 20% range, with improvement of 21% in this most recent quarter. Other than the stimulus period in 2021, we achieved a new record for the highest second quarter GMV that it seemed as ever recorded. Similar to last quarter, this was powered by two primary factors: the addition of new merchant partners, as well as the lift and productivity for our existing network of retailers, which means we're transacting more leases per location.

Speaker Change: Starting with the SEMA we achieved our third consecutive quarter of GMV growth in the 20% range with an improvement of 21% in this most recent quarter.

Mitch Fadel: Similar to last quarter, this was powered by two primary factors, the addition of new merchant partners, as well as a lift in productivity for our existing network of retailers, which means we're transacting more leases per location. In terms of new partners, the SEMA's business development team has signed up nearly 10% of net new merchant nameplates year over year. Now, we focus on enrolling new retail partners. We're equally committed to providing our current merchants with top-tier service tailored to their particular business and retail specialties and by collaborating with them on our marketing.

Speaker Change: Similar to last quarter, this was powered by two primary factors, the addition of new merchant partners.

Mitch Fadel: In terms of new partners, SEMA's business development team has signed up nearly 10% net new merchant name plates that year over year. Now what we do focus on the rolling new retail partners, we're equally committed to providing our current merchants with top-tier service tailored to their particular business and retail specialty. In fact, collaborating with them on our marketing initiatives, we're able to more efficiently deliver, more effectively deliver the right message to consumers at the right time, like data-driven marketing campaigns, or three theme promotions, which provides a better experience for our customers and drives better outcomes for the retailer's top line.

Mitch Fadel: We're able to more efficiently deliver and more effectively deliver the right message to consumers at the right time, like data-driven marketing campaigns or three-themed promotions, which provides a better experience for our customers and drives better outcomes for the retailers. Our current merchants see the value in these efforts, which is why the active location count was up nearly 10% against a year ago. As a result, we saw a notable 35% lift in applications compared to last year.

Mitch Fadel: Our current merchants see the value in these efforts, which is why active location count was up nearly 10% against a year ago period. As a result, we saw a notable 35% lift in applications compared to last year, when you add together the more merchants and more effective within those merchants, 35% application growth over last year. But it's also important to remember that in the intervening year, we deepened our relationships with two of our enterprise partners in Wayfair and Ashley.com, and we'll start to consumer offer and continue to grow with GMV from that funnel up over 50% as we add brand name retailers to the site and continuously improve the shopping experience for our consumers.

Speaker Change: As a result, we saw a notable 35% lift in applications compared to last year.

Mitch Fadel: When you add together the more merchants and more effective within those merchants, 35% application growth over last year. But it's also important to remember that in the intervening year, we deepened our relationships with two of our enterprise partners, Wayfair and Ashley.com, and we'll start to count their enhanced volumes later this year. I'm also pleased to share that Acima's direct-to-consumer offering continues to grow, with GMV from that funnel up over 50% as we add brand-name retailers to the site and continuously improve the shopping experience for our consumers. While most consumers first encounter Acemo when shopping at a retail partner, either in store or online, our Acemo marketplace also enables customers to start their journey directly with us and with shopping destinations like Ashley and Ikea.

Speaker Change: When you add together the more merchants and more effective within those merchants, 35% application growth over last year. But it's also important to remember that in the intervening year, we deepened our relationships with two of our enterprise partners.

Speaker Change: I'm also pleased to share that Acima's direct-to-consumer offering continues to grow, with GMV from that funnel up over 50% as we add brand-name retailers to the site and continuously improve the shopping experience for our consumers.

Mitch Fadel: Well, most consumers first encounter a SEMA when shopping at a retail partner, either in store or online. Our SEMA marketplace also enables customers to start their journey directly with us. We're shopping destinations like Ashley, IKEA, Amazon, and Best Buy. Our customers can quickly and easily find what they need and complete their lease on our site 24 hours a day, 7 days a week, 365 days a year. Collectively, these are the efforts that resulted in Q2 revenues to be up 19% year over year. Similar to Q1, average ticket size was down a little bit, so the top line list was driven by the expanded penetration and the productivity that I've been talking about.

Speaker Change: While most consumers first encounter Acima when shopping at a retail partner, either in-store or online, our Acima Marketplace also enables customers to start their journey directly with us.

Speaker Change: And with shopping destinations like Ashley, IKEA, Amazon, and Best Buy, our customers can quickly and easily find what they need and complete their lease on our site, 24 hours a day, 7 days a week, 365 days a year.

Mitch Fadel: Amazon and Best Buy, our customers can quickly and easily find what they need and complete their lease on our site 24 hours a day, 7 days a week, 365 days a year. Collectively, these are the efforts that resulted in Q2 revenues being up 19% year-over-year. Similar to Q1, average ticket size was down a little bit, so the top-line lift was driven by the expanded penetration and the productivity that I've been talking about.

Speaker Change: Collectively, these are the efforts that resulted in Q2 revenues to be up 19% year-over-year.

Mitch Fadel: Overall, the SEMA exited the second quarter with a funded lease count that was approximately 24% higher versus last year, as well as sequentially higher when compared to the first quarter of 2024. And from an underwriting standpoint, we continue to take a proactive and vigilant approach to risk management. Our SEMA segment loss rate was 9.6%, in line with our expectations, and flat sequentially from the last quarter.

Mitch Fadel: Overall, the SEMA Exit is the second quarter with a fund at least count that was approximately 24% higher versus last year, as well as sequentially higher when comparing it against the first quarter of 2024. From an underwriting standpoint, we continue to take a proactive and vigilant approach to risk management. Our SEMA segment lost rate was 9.6% in line with our expectations and flats sequentially to the last quarter. Despite the volume of applications increasing 35% year-over-year and the strong growth numbers we've been talking about, SEMA's approval rate declined 160 basis points from last year. In terms of delinquencies, SEMA's 60 plus task due rate in the second quarter was down 80 basis points from a year, going down 90 basis points sequentially to the first quarter this year.

Mitch Fadel: Despite the volume of applications increasing 35% year-over-year and the strong growth numbers we've been talking about, the seamless approval rate declined 160 basis points from last year. And in terms of delinquencies, a SEMA 60 plus past due rate in the second quarter was down 80 basis points from a year ago and down 90 basis points sequentially from the first quarter. These results were in line with our expectations for the second quarter, and with the acceptance now integration into a seamless decision engine nearly behind it, we remain very confident in our risk management outlook for the year.

Speaker Change: Despite the volume of applications increasing 35% year-over-year and the strong growth numbers we've been talking about, the seamless approval rate declined 160 basis points from last year.

Speaker Change: And in terms of delinquencies, a SEMA 60-plus past-due rate in the second quarter was down 80 basis points from a year ago and down 90 basis points sequentially to the first quarter this year.

Mitch Fadel: The usual results were in line with our expectations for the second quarter and with the acceptance of integration into a SEMA's decision engine nearly behind us. We remain very confident in a risk management outlook for the year. As noted earlier, I'm pleased to share that our adjusted EBITOM margin and SEMA improved by 310 basis points to 14.7% in the second quarter as compared to the first quarter, as we've begun to experience some of the flow through we talked about with that higher GMV. The EBITOM margins from a year-go second quarter were a typically high and driven by the macro backdrop at that time.

Speaker Change: These results were in line with our expectations for the second quarter, and with the acceptance now integration into a seamless decision engine nearly behind us.

Mitch Fadel: As noted earlier, I'm pleased to share that our adjusted EBITDA margin at ESIMA improved by 310 basis points to 14.7% in the second quarter as compared to the first quarter, as we've begun to experience some of the flow-through we talked about with that higher GMV. The EBITDA margins from a year ago in the second quarter were atypically high and driven by the macro backdrop at that time. So, expecting the next couple of quarters of EBITDA margins to follow the current performance curve and land in this area, which is right in line with our expectations of low to mid-teens for the second quarter.

Speaker Change: As noted earlier, I'm pleased to share that our adjusted EBITDA margin at ESIMA improved by 310 basis points to 14.7% in the second quarter as compared to the first quarter as we've begun to experience some of the flow-through we talked about with that higher GMV.

Mitch Fadel: So expecting the next couple of quarters of EBITOM margins is a SEMA to follow the current performance curve and land in this area, which is right in line with our expectations of low to mid teens for the segment.

Mitch Fadel: Our team at the SEMA is committed to running a lean business that realizes the scale inherent in its virtual platform model, and I'm confident we can continue to deliver sustainable, profitable growth. Now in Rennes Center, we finished the second quarter with a SEMS store lease portfolio that was up 140 basis points year over year, and that portfolio growth helped drive positive SEMS store sales growth of 2.6% as we carried forward the momentum from last quarter's positive SEMS store sales growth. Rennes Center's web channel volume continues to perform, and it represented approximately 26% of revenue in the second quarter, which was consistent with the year-go period.

Mitch Fadel: Our team at Acima is committed to running a lean business that realizes the scale inherent in its virtual platform model, and I'm confident we can continue to deliver sustainable, profitable Now, in Rent-A-Center, we finished the second quarter with a same-store lease portfolio that was up 140 basis points year-over-year, and that portfolio growth helped drive positive same-store sales growth of 2.6% as we carried forward the momentum from last quarter's Renaissance Web Channel volume continues to perform, and it represented approximately 26% of revenue in the second quarter, which was consistent with the year-ago period.

Mitch Fadel: These elements helped deliver revenue growth of 1.9% year over year, which flowed through to growth profit with a similar lift. Operating expenses increased approximately 4% compared to last year due to a combination of elevated labor benefits costs, delivery costs, and store technology investments. We expect the labor benefits expenses to normalize in the back half of the year, especially with a store consolidation efforts. As past quarter, in our fleet management team, is actively working on operating strategies to optimize efficiency. Our continued emphasis on underwriting and account management at Rennes Center resulted in a lease charge operate of 4.2% for the quarter, down 30 basis points from the second quarter last year.

Mitch Fadel: These elements helped deliver revenue growth of 1.9% year over year, which flowed through to gross profit with a similar. Operating expenses increased approximately 4% compared to last year due to a combination of elevated labor benefits costs, delivery costs, and store technology investments. We expect labor benefits expenses to normalize in the back half of the year, especially with historic consolidation efforts this past quarter, and our fleet management team is actively working on operating strategies to optimize.

Mitch Fadel: Our continued emphasis on underwriting and account management at Reno's Center resulted in a lease charge-off rate of 4.2% for the quarter, down 30 basis points from the second quarter of last year. Our past due rate, which is an early indicator of potential future lease charge-offs, was stable at 2.7% for the quarter, down 40 basis points sequentially.

Mitch Fadel: Our past due rate, which is an early indicator of potential future lease charge, also stable at 2.7% for the quarter, down 40 basis points sequentially. Although the pace of inflation has recently abated, which will reduce the economic pressure on Rennes Center's customer base over time, our account management efforts will continue to be an important element of customer connectivity in the near to mid to medium term to help us maintain our delinquency and charge off rates at our target reaches.

Speaker Change: Our past due rate, which is an early indicator of potential future lease charge-offs, was stable at 2.7% for the quarter, down 40 basis points sequentially.

Mitch Fadel: Although the pace of inflation has recently abated, which will reduce the economic pressure on Reno Center's customer base over time, our account management efforts will continue to be an important element of customer connectivity in the near to mid to medium term to help us maintain our delinquency and charge-off rates at our current rates. Overall, we're very pleased with our operating and financial results in the second quarter. Both segments successfully met our customers' and merchants' expectations, enabling us to achieve that 21% GMV growth into SEMA while meeting that mid-teens EBITDA margin target, along with the same store sales growth at revenue. These results, along with the momentum we've already seen in the early July results.

Speaker Change: to be an important element of customer connectivity in the near to mid to medium term to help us maintain our delinquency and charge rates at our current at our target ranges.

Mitch Fadel: Overall, we're very pleased with our operating and financial results in the second quarter. Both segments successfully anticipated met our customers in merchant expectations, enabling us to achieve that 21% GMV growth at the SEMA while meeting that mid-teens EBITL margin target along with the same store sales growth at Rennes. Center. These results, along with a momentum we've already seen in the early July results, give us confidence that we're tracking well towards achieving our updated and increased full-year targets.

Speaker Change: Overall, we're very pleased with our operating and financial results in the second quarter. Both segments successfully anticipated and met our customers and merchants expectations, enabling us to achieve that 21% GMV growth into SEMA, while meeting that mid-teens EBITDA margin target.

Mitch Fadel: give us confidence that we're tracking well towards achieving our updated and increased full year target. So on slide five, let's review the status of the strategic priorities we outlined for. At Acima, we believe we continue to grow our market share with a nearly 10% increase in merchant partners year-over-year, with additions such as Purple Mattress and iFit, whose family of brands includes Nordic Trek and Profit. We also onboarded two of the top 50 furniture retailers in the U.S., Levin Furniture in Sloverland.

Mitch Fadel: So on slide five, let's review the status of the strategic priorities we outlined for the year. At a scene where we believe we continue to grow our market share with a nearly 10% increase in merchant partners year-over-year, with additions such as Purple Mattress and iFit, whose family brands includes NordicTrack and ProForm. We also onboarded two of the top 50 furniture retailers in the U.S. Levin, furniture, and slower land furniture. Well, we haven't yet seen the hard lines category fully recovered from the pandemic year of poll forward. We believe our line-up of merchants in that vehicle is poised to accelerate when it does.

Speaker Change: We also onboarded two of the top 50 furniture retailers in the U.S., Levin Furniture and Sloverland Furniture.

Mitch Fadel: While we haven't yet seen the hardlines category fully recover from the pandemic era, we believe our lineup of merchants in that vertical is poised to accelerate when it does. In fact, we now partner with six of the top 15 furniture retailers in the U.S. It's important to note that, in addition to maintaining a strong presence among the largest furniture retailers, our teams have the talent and technology to deliver superior service and outcomes to sizable partners in a number of retail categories.

Mitch Fadel: In fact, we now partner with six of the top 15 furniture retailers in the U.S. It's important to note that, in addition to maintaining a strong presence among the largest furniture retailers, our teams have the talent and technology to deliver superior service and outcomes to sizable partners in a number of retail categories. And even as we had national and regional accounts, the SEMA's merchant network remains well diversified. In the second quarter, our largest retailer represented approximately 6% of total GMV, and the top five were collectively about 20%. We strongly believe that the diversification of our merchant-based AMP product categories will help provide a stable foundation of predictable and sustainable growth for the future.

Mitch Fadel: And even as we add national and regional accounts, Acima's merchant network remains well diversified. In the second quarter, our largest retailer represented approximately 6% of total GMV, and the top five were collectively about 20%. We strongly believe that the diversification of our merchant base and product categories will help provide a stable foundation of predictable and sustainable growth for the future. So we continue to add national and regional players, but we also add smaller players to keep that and GRRRAL.

Speaker Change: In the second quarter, our largest retailer represented approximately 6% of total GMB, and the top five were collectively about 20%.

Speaker Change: We strongly believe that the diversification of our merchant base and product categories will help provide a stable foundation of predictable and sustainable growth for the future. So we continue to add

Mitch Fadel: So we continue to add national and regional players, but we also had the smaller players to keep that diversity and growth.

Mitch Fadel: One of our recent operational priorities has been the migration of the Acceptance Now staff business from the legacy underwriting platform over to a SEMA's Decision Edge. I am pleased to report that veteran is nearly done with only a few stores in Puerto Rico remaining. As we wrap up our conversion, I'd like to speak to the benefits of the initiative. For retailers, we can embed a SEMA team member's on-site at certain high-volume locations to supplement the merchants' in-house team. Our representatives can serve as the leasing coordinator to help customers complete the NLCO transaction in between transactions that can reinforce the training we provide to the retailer staff about a SEMA's leasing process.

Mitch Fadel: One of our recent operational priorities has been the migration of the Acceptance Now staff business from the legacy underwriting platform over to a seamless decision. And please report that that journey is nearly done, with only a few stores in Puerto Rico remaining. As we wrap up our conversion, I'd like to speak to the benefits of the initiative. For our retailers, we can embed Acima team members at certain high-volume locations to supplement the merchant's in-house team. Our representatives can serve as the leasing coordinator to help customers complete an LCO transaction, and in between transactions, they can reinforce the training we provide to the retailer's staff about a SEMAS leasing plan.

Speaker Change: Our representatives can serve as the leasing coordinator to help customers complete an LTO transaction and in between transactions they can reinforce the training we provide to the retailer's staff about a seamless leasing process.

Mitch Fadel: At hundreds of locations across the country, our team can drive nearly double the conversion rate of a non-staff store while allowing the retailer to redeploy resources more efficiently. In terms of underwriting, the consumer experience, a shift is a really important milestone for a SEMA. The legacy platform was not designed for virtual account transactions. Given the SEMA's fully virtual model, the decision engine was designed for the beginning and the digital orders and should deliver stronger lease outcomes with lower losses. From a customer experience standpoint, the SEMA platform allows our customers the flexibility to fully check out online without speaking to one of our representatives or physically going into the retail store like they had to do it except since now.

Mitch Fadel: At hundreds of locations across the country, our team can drive nearly double the conversion rate of a non-staff store while allowing the retailer to redeploy resources more efficiently. In terms of underwriting, and the consumer experience, a shift is a really important milestone for esteem. The legacy platform was not designed for virtual account transactions.

Mitch Fadel: Given the CMIS fully virtual model, the decision engine was designed from the beginning to handle digital orders and should deliver stronger lease outcomes with lower losses. From a customer experience standpoint, the Acimo platform allows our customers the flexibility to fully check out online without speaking to one of our representatives or physically going into the retail store like they had to do at Acceptance Now. This should improve conversion and increase GMV at these locations because they can now best handle the whole spectrum of customer interaction.

Speaker Change: Given the CMIS fully virtual model, the decision engine was designed from the beginning to handle digital orders and should deliver stronger lease outcomes with lower losses.

Mitch Fadel: This should improve conversion and increase GMV at these locations because now they can vet-handle the whole spectrum of customer interaction. We're excited about the opportunity to improve yields, increase GMV for those merchant partners, and supplement our staff business with a sophisticated underwriting platform.

Speaker Change: This should improve conversion and increase GMV at these locations because now they can best handle the whole spectrum of customer interactions.

Mitch Fadel: We're excited about the opportunity to improve yields, increase GMV for those merchant partners, and supplement our staff business with a sophisticated underwriting pledge. At Rent-A-Center, we've highlighted our continuing investments in technology, and in particular, in our digital channels to help us seamlessly serve our customers, whether it's in-store or online. And those investments are paying off, with nearly 17 million visits to renestrator.com in the second quarter, which increased double digits against the year-ago quarter.

Speaker Change: We're excited about the opportunity to improve yields, increase GMV for those merchant partners, and supplement our staff business with a sophisticated underwriting platform.

Mitch Fadel: At Rennes Center, we've highlighted our continuing investments in technology, and in particular in our digital channels to help us seamlessly serve our customers, whether it's in-store or online. In those investments are paying off with nearly 17 million visits to Rennes Center.com in the second quarter, which increased double digits against the year ago quarter. Our web visits being up double digits reflects our team's efforts to drive online traffic and create a consistent, friction-free customer experience across each of our channels. More specifically, we've added new identity validation steps to exploit the online checkout process for customers while improving our ability to screen out fraudulent traffic.

Rent-A-Center: At Rent-A-Center we've highlighted our continuing investments in technology and in particular in our digital channels to help us seamlessly serve our customers whether it's in-store or online.

Mitch Fadel: Our web visits being up double digits reflects our team's efforts to drive online traffic and create a consistent, friction-free customer experience across each of our channels. More specifically, we've added new identity validation steps to expedite the online checkout process for customers while improving our ability to screen out fraudulent traffic.

Mitch Fadel: As we see more of our customer interaction shifted digital channels, we have an opportunity to optimize our footprint, our store footprint, which is already closely managed, based on key store level metrics we look at and what's going on in the local area, and based on those variables. We consolidate at 55 stores or approximately 3% of our company-owned stores during the first half of the year, most of which took place in the second quarter. We expect to maintain those relationships with the majority of customers by serving them in the nearby store or by engaging them online, and going forward, we'll keep working to strike the right balance to serve our customers efficiently across all our connection points while optimizing Rennes Center scale and productivity.

Mitch Fadel: As we see more of our customer interaction shift to digital channels, we have an opportunity to optimize our footprint, our store footprint, which is already closely managed, you know, based on key store level metrics we look at and what's going on in the local area. And based on those variables. We consolidated 55 stores, or approximately 3% of our company-owned stores, during the first half of the year, most of which took place in the second quarter.

Rent-A-Center: As we see more of our customer interaction shift to digital channels, we have an opportunity to optimize our footprint, our store footprint, which is already closely managed, you know, based on key store-level metrics we look at and what's going on in the local area, and based on those variables.

Mitch Fadel: We expect to maintain those relationships with the majority of customers by serving them in a nearby store or by engaging them online. And going forward, we'll keep working to strike the right balance to serve our customers efficiently, across all our connection points, while optimizing Renaissance scale and productivity. At the Upbound level, we continue to test and learn in the consumer credit space through our partnership with Concura. We've made sequential progress each month since we launched the pilots in February for the Acima Classic Credit General Purpose MasterCard and the Acima Private Label Credit Cards, each of which expands our offerings as well as financial access for our customers.

Mitch Fadel: At the up on level, we continue to test and learn in the consumer credit space through our partnership with Concurrer. We've made sequential progress each month since we launched the pilots in February for the Assima Classic Credit General Purpose Mastercard and the Assima Private Label Credit Card, each of which expands our offerings as well as financial access for our customers. In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners. Some of our current merchant partners are looking to streamline their vendor relationships, and our combined second look and LTO offering delivers increased opportunities to serve more consumers with our leading solutions.

Mitch Fadel: In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners. Some of our current merchant partners are looking to streamline their vendor relationships, and our combined second look and LTO offering delivers increased opportunities to serve more consumers with our leading solution. We've also found that potential clients, especially those without an incumbent second look credit provider, appreciate the one-stop shop approach, especially when considering integration efforts for the POS.

Rent-A-Center: In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners.

Rent-A-Center: Some of our current merchant partners are looking to streamline their vendor relationships and our combined second look and LTO offering delivers increased opportunities to serve more consumers with our leading solutions.

Mitch Fadel: We've also found that potential clients, especially those without an incumbent second look credit provider, appreciate the one snapshot approach, especially when considering integration effort for the POS systems. As a reminder, we structured our existing partnership with the concurrer, so we're not taking any credit risk, and our economics are driven by upfront fees and revenue sharing.

Rent-A-Center: We've also found that potential clients, especially those without an incumbent second look credit provider, appreciate the one-stop-shop approach, especially when considering integration effort for their POS systems.

Mitch Fadel: As a reminder, we structured our existing partnership with Concurra so we're not taking any credit risk, and our economics are driven by upfront fees and revenue sharing. Also, at the Upbound level, we continue to make significant investments in digital technology to support our business. Our strategic initiatives on the connected enterprise are on target to supercharge our omni-channel strategy within Renison and across the organization. The recent launch of RackPad, our next generation cloud native POS, sets the direction towards an integrated customer experience across all. Its microservices architecture promotes swift development of features and product integration, prioritizing customer experience and boosting coworker efficiency with user-friendly work.

Mitch Fadel: Also at the up on level, we continue to make significant investments in digital technology to support our business. Our strategic initiatives on the connected enterprise, our on target to supercharger, our omnichannel strategy within Rennes Center and across the organization. The recent launch of RACPAD are our next generation cloud native POS system sets the direction towards an integrated customer experience across all channels. Its microservices architecture promotes swift development of features in product integration, prioritizing customer experience and boosting co-worker efficiency with user friendly work.

Rent-A-Center: Also at the Upbound level, we continue to make significant investments in digital technology to support our business.

Rent-A-Center: Our strategic initiatives on the connected enterprise are on target to supercharge our omni-channel strategy within Renison and across the organization.

Rent-A-Center: The recent launch of RackPad, our next-generation cloud-native POS system.

Rent-A-Center: Its microservices architecture promotes swift development of features and product integration, prioritizing customer experience and boosting coworker efficiency with user-friendly workflows.

Mitch Fadel: Close. Our online traffic continues to show double-digit growth, and to support this increased demand, we're introducing a new e-commerce platform based on a modular architecture that will allow our brands to adopt, deploy, and scale an omnichannel sales approach, focus on increased conversion and retention rates. As we reduce our data center footprint, both of these initiatives mark a significant milestone of improving scalability of our operations, reducing technical debt, and bolstering our cyber resiliency, which are key components to support our growth.

Mitch Fadel: Our online traffic continues to show double-digit growth, and to support this increased demand, we're introducing a new e-commerce platform based on a modular architecture that will allow our brands to adopt, deploy, and scale a non-channel sales approach focused on increased conversion and retention. As we reduce our data center footprint, both of these initiatives mark a significant milestone in improving the scalability of our operations.

Rent-A-Center: Our online traffic continues to show double-digit growth, and to support this increased demand, we're introducing a new e-commerce platform based on a modular architecture that will allow our brands to adopt, deploy, and scale a nominal-channel sales approach focused on increased conversion and retention rates.

Mitch Fadel: Reducing Technical Debt and Bolstering our Cyber Resiliency, which are key components to support our growth. Overall, there's still plenty of uncertainty in the market, whether it's where the economy is headed, consumer sentiment, industry dynamics, or even the upcoming election. But we view that as an opportunity, because our business is built to succeed across these. We're already passionate about serving our current customers, and we expect new customers will discover our product offerings as the trade-down continues.

Rent-A-Center: Reducing technical debt and bolstering our cyber resiliency which are key components to support our growth.

Mitch Fadel: Overall, there's still plenty of uncertainty in the market, whether it's where the economy has had it, consumer sentiment, industry dynamics, or even the upcoming election. But we view that as an opportunity, as our business is built to succeed across these cycles. We're already passionate about serving our current customers, and we expect new customers will discover our product offerings as trade-down content and continue. And when they do, we'll be ready as a trusted brand to help them get the products they need to live their lives, their daily lives, to the fullest.

Mitch Fadel: And when they do, we'll be ready as a trusted brand to help them get the products they need to live their lives, their daily lives to the full. Now, before I hand it off to Fahmi, I'd like to briefly address the lawsuit, a SEMA leasing lawsuit filed against the CFPB last year. We brought this action in Texas federal court seeking to halt what we contend is the CFPB's unauthorized attempt to expand its authority, which is limited by federal law, and usurp the long-standing comprehensive state regulatory framework governing our industry and the leased zone.

Mitch Fadel: Now, before I hand it off to Fahmi, I'd like to briefly address the lawsuit, as Seema Leasing filed against the CFPV last week. We prop this action in Texas federal court seeking to halt what we contend is the CFPV's unauthorized attempt to expand its authority, which is limited by federal law. And you serve the longstanding comprehensive state regulatory framework governing our industry, governing the least-known industry. As you know, we previously disclosed that the CFPV has been conducting an investigation of a Seema that began prior to a positive acquisition of a company in 2021. After this protracted investigation, the CFPV threatened an imminent enforcement action against Seema.

Mitch Fadel: As you know, we previously disclosed that the CFPB had been conducting an investigation of a SEMA that began prior to Upbound's acquisition of the company in 2021. After this protracted investigation, the CFPB threatened an imminent enforcement action against them. I want to make clear that ACIMA filed this lawsuit reluctantly. Despite our long-standing cooperation, we ultimately concluded that CFPB was not prepared to settle with ACIMA on acceptable terms.

Mitch Fadel: Now, I want to make clear that a Seema filed this lawsuit reluctantly. Despite our longstanding cooperation, we also ultimately concluded that the CFPV was not prepared to settle with the Seema on acceptable terms. Then, as expected, the CFPV subsequently initiated an enforcement action against the Seema on July 26th, alleging violations of various federal consumer financial protection statutes. We believe the CFPV is engaging in form shopping by finding a lawsuit in Utah after our lawsuit was already pending in Texas addressing the same subject matter. We strongly contest our claims and will vigorously defend ourselves against them.

Speaker Change: Despite our long-standing cooperation, we ultimately concluded the CFPB was not prepared to settle with the CIMA on acceptable terms.

Mitch Fadel: Then, as expected, the CFPB subsequently initiated an enforcement action against the SEMA on July 26, alleging violations of various federal consumer financial protection statutes. We believe the CFPB is engaging in forum shopping by finding a loss in Utah, while after our loss, it was already pending in Texas addressing the same subject. We strongly contest their claims and will vigorously defend ourselves against them.

Speaker Change: We believe that CFPB is engaging in forum shopping by finding a loss in Utah after our loss that was already pending in Texas addressing the same subject matter.

Rent-A-Center: We strongly contest their claims and will vigorously defend ourselves against them.

Mitch Fadel: So, as you would expect, though, because of the pending litigation, we're not able to come in any further on this matter. So, as I ramp up my section, I'd like to thank my exceptional teammates across all the corners of our business for their energy, their enthusiasm, and their dedication. I know they're just as excited as I'm about carrying them momentum from the first half of the year across the second half and beyond.

Mitch Fadel: As you would expect, though, because of the pending litigation, we're not able to comment any further on this matter. But as I wrap up my section, I'd like to thank my exceptional teammates across all the corners of our business for their energy, their enthusiasm, and their dedication. I know they're just as excited as I am about carrying the momentum from the first half of the year across the second half and beyond. Whether working on segment-specific projects or collaborating on enterprise-wide priorities, our colleagues are the driving force that will help us deliver a strong finish to the year. And with that, I'll turn the call over to you.

Fahmi Karam: Whether working on segment-specific projects or collaborating on enterprise-wide priorities, our co-workers are the driving force that will help us deliver a strong finish to the year. And with that, I'll turn the call over to family.

Fahmi Karam: Thank you, Mitch, and good morning, everyone. I'll start today with a review of the second quarter results, and then discuss our outlook for the rest of the year, after which we will take questions. Beginning on page 6 of the presentation.

Fahmi Karam: Thank you, Mitch, and good morning, everyone. I'll start today with a review of the second quarter results and then discuss our outlook for the rest of the year, after which we will take questions, beginning on page six of the presentation.

Fahmi Karam: Consolidated revenue for the second quarter was up 9.9% year-over-year, with the SEMA up 19% and Rent-A-Center up 1.9%. Rentals and fees revenues were up 9.7%, while merchandise sales revenue increased 17.3%, reflecting a larger portfolio balance at a schema coming into the quarter. Consolidated gross margin was 49.4% and decreased 230 basis points year-over-year, with a 190 basis point decrease in the ASEMA segment and a 40 basis point decrease in the Rena Center segment.

Fahmi Karam: Reformation. Consolidated revenue for the second quarter was up 9.9% year-over-year, with a SEMA up 19% and Rent a Center of 1.9%. Rentals and fees revenues were up 9.7%, while merchandise sales revenue increased 17.3%, reflecting a larger portfolio balance at a SEMA coming into the quarter. Consolidated gross margin was 49.4% and decreased 230 basis points year-over-year, with a 190 basis point decrease in the SEMA segment and a 40 basis point decrease in the Rent a Center segment. Consolidated non-GAAP operating expenses, excluding lease charge-offs and depreciation and hammeredization, were up with single digits, led by a low double-digit increase in non-labor operating expenses, including delivery costs at Rent a Center, and a high single-digit increase in general and administrative costs, which was a result of targeted corporate investments in technology and people.

Speaker Change: Consolidated revenue for the second quarter was up 9.9% year-over-year, with the SEMA up 19% and Rent-A-Center up 1.9%.

Fahmi Karam: Consolidated non-GAAP operating expenses, excluding lease charge-offs and depreciation and amortization, were up mid-single digits, led by a low double-digit increase in non-labor operating expenses, including delivery costs at rent-a-center, and a high single-digit increase in general and administrative costs, which was a result of targeted corporate investments in technology and people. The consolidated lease charge-off rate was 7.2 percent, a 30 basis point increase from the prior year period and in line with our expectations. On a sequential basis, the consolidated lease charge-off rate decreased 20 basis points due to a 50-basis-point sequential improvement at Renison.

Rent-A-Center: Consolidated non-GAAP operating expenses, excluding lease charge-offs and depreciation and amortization, were up mid-single digits.

Fahmi Karam: The consolidated lease charge-off rate was 7.2%, a 30 basis point increase from the prior year period and in line with our expectations. On a sequential basis, the consolidated lease charge-off rate decreased 20 basis points due to a 50 basis point sequential improvement at Rent a Center. Consolidated adjusted EBITDAV 124.5 million decreased 4.6% year-over-year, with higher SEMA segment adjusted EBITDAV offset by lower Rent a Center segment adjusted EBITDAV and higher corporate costs. Adjusted EBITDAV margin of 11.6% was done approximately 170 basis points compared to the prior year period, with approximately 160 basis points contraction for Rent a Center and approximately 210 basis points of margin contraction for SEMA, offset by a 20 basis point decrease in corporate costs as a percentage of sales.

Rent-A-Center: The consolidated lease charge-off rate was 7.2%, a 30 basis point increase from the prior year period, and in line with our expectations.

Rent-A-Center: On a sequential basis, the consolidated lease charge-off rate decreased 20 basis points due to a 50 basis point sequential improvement at Rent-A-Center.

Fahmi Karam: Consolidated Adjusted EBITDA of $124.5 million decreased 4.6% year-over-year with higher ASEMA segment adjusted EBITDA, offset by lower Rent-A-Center segment adjusted EBITDA, and higher corporate costs. Adjusted EBITDA margin of 11.6% was down approximately 170 basis points compared to the prior year period, with approximately 160 basis points of contraction for Rendez-Centre and approximately 210 basis points of margin contraction for Acima, offset by a 20 basis point decrease in corporate costs as a percentage of sales.

Rent-A-Center: Consolidated Adjusted EBITDA of $124.5 million decreased 4.6% year-over-year with higher ACIMA segment Adjusted EBITDA, offset by lower Rent-A-Center segment Adjusted EBITDA, and higher corporate costs.

Fahmi Karam: I'll provide more detail in the segment results in a moment. Looking below the line, second quarter net interest expense was approximately 28 million, which was roughly flat compared to the prior year period. The effective tax rate on non-GAT basis was 25.8%, compared to 25.5% for the prior year period. The diluted average share count was 55.8 million shares in the quarter. GAT earnings per share was 61 cents in the second quarter compared to a loss per share of 83 cents in the prior year period, which was driven by the prior year tax impact associated with the vesting of a research stock awards issued in connection with the SEMA acquisition.

Fahmi Karam: I'll provide more detail on the segment results in a moment. Looking below the line, second quarter net interest expense was approximately $28 million, which is roughly flat compared to the prior year period. The effective tax rate on a non-GATT basis was 25.8%, compared to 25.5% for the prior year period.

Rent-A-Center: The diluted average share count was 55.8 million shares in the quarter.

Fahmi Karam: The diluted average share count was 55.8 million shares. Gap earnings per share was $0.61 in the second quarter compared to a loss per share of $0.83 in the prior year period, which was driven by the prior year tax impact associated with the divesting of restricted stock awards issued in connection with the ASEMA acquisition. After adjusting for special items that we believe do not reflect the underlying performance of our business, non-gas diluted EPS was $1.04 in the second quarter of 2024, compared to $1.11 in the prior year period.

Fahmi Karam: After adjusting for special items that we believe do not reflect the underlying performance of our business, non-GAAP diluted EPS was $1.04 in the second quarter of 2024 compared to $1.11 in the prior year period. During the second quarter, we generated $600,000 of free cash flow, which decreased from $24.7 million in the prior year period, primarily due to the increase of GMV at a SEMA. We distributed a quarterly dividend of $0.37 per share, and we finished the second quarter with a net leverage ratio of approximately 2.8 times.

Speaker Change: Non-Gas Diluted EPS was $1.04 in the second quarter of 2024 compared to $1.11 in the prior year period.

Fahmi Karam: During the second quarter, we generated $600,000 of free cash, which decreased from $24.7 million in the prior year period, primarily due to the increase in GMB at Acima. We distributed a quarterly dividend of $0.37 per share, and we finished the second quarter with a net leverage ratio of approximately 2.8 times. Drilling down to the segment results starting on page 7, for ACIMA, double-digit year-over-year GMV growth continued for the third consecutive quarter, following nearly 20% year-over-year growth in the prior two quarters.

Speaker Change: We distributed a quarterly dividend of 37 cents per share, and we finished the second quarter with a net leverage ratio of approximately 2.8 times.

Fahmi Karam: Drilling down to the segment results starting on page 7. For a SEMA, double-digit year-over-year GMV growth continued for the third consecutive quarter. Following nearly 20% year-over-year growth in the prior two quarters, GMV grew 21% in the second quarter and approximately 15% on a two-year stacked basis. The GMV list was driven by year-over-year growth in key underlying drivers, with active merchant locations up 9.8% year-over-year, more productivity per merchant, and applications increasing over 35%. Those tailwinds were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base.

Speaker Change: For ACIMA, double-digit year-over-year GMV growth continued in the for the third consecutive quarter.

Speaker Change: Following nearly 20% year-over-year growth in the prior two quarters, GMV grew 21% in the second quarter and approximately 15% on a two-year stacked basis.

Fahmi Karam: GMV grew 21% in the second quarter and approximately 15% on a two-year stacks-based basis. The GMV list was driven by year-over-year growth and key underlying drivers, with active merchant locations up 9.8% year-over-year, more productivity per merchant, and applications increasing over 35%. Those tailwinds were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base. The net asset value of inventory under lease was up approximately 23% year-over-year.

Speaker Change: The GMV list was driven by year-over-year growth in key underlying drivers, with active merchant locations up 9.8% year-over-year, more productivity per merchant, and applications increasing over 35%.

Speaker Change: Those tailwinds were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base.

Fahmi Karam: The net asset value of inventory under lease was up approximately 23% year-over-year. Revenue increased 19% year-over-year, including an 18.2% increase in rentals and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year. Least charge-offs for the SEMA segment were 9.6%, 70 basis points higher year-over-year and flat sequentially. The year-over-year increase in the SEMA's lease charge-offs was in line with our expectations as the A now leads to the originated on the legacy decision engine continue to wind down. The conversion will strengthen our underwriting capabilities and should reduce lease charge-off rates as prior cohorts from the legacy system wind down throughout the year.

Fahmi Karam: Revenue increased 19% year-over-year, including an 18.2% increase in rental and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year. Lease charge-offs for the ASEMA segment were 9.6%, 70 basis points higher year-over-year, and flat. The year-over-year increase in Acima's lease charge-offs was in line with our expectations as the a-now leases originated on the legacy decision engine continue to wind down.

Speaker Change: Revenue increased 19% year-over-year, including an 18.2% increase in rentals and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year.

Speaker Change: Lease charge-offs for the athema segment were 9.6%, 70 basis points higher year-over-year, and flat sequentially.

Speaker Change: The year-over-year increase in Acima's lease charge-offs was in line with our expectations as the a-now leases originated on the legacy decision engine continue to wind down.

Fahmi Karam: The conversion will strengthen our underwriting capabilities and should reduce lease charge-off rates as prior cohorts from the legacy system wind down throughout the year. However, operating costs, excluding lease charge-offs, were up, on a dollar basis, approximately $4.6 million in the second quarter, which was 60 basis points lower as a percentage of revenue.

Speaker Change: The conversion will strengthen our underwriting capabilities and should reduce lease charge-off rates as prior cohorts from the legacy system wind down throughout the year.

Fahmi Karam: Operating costs, excluding lease charge-offs, were up on a dollar basis approximately $4.6 million in the second quarter, which was 60 basis points lower as a percentage of revenue. Adjusted Yvodav 81.3 million was up 4.5% year-over-year, primarily due to the 19% increase in revenue that was partially offset by a 22.5% increase in cost of the goods sold. Adjusted Yvodav margin of 14.7% increased approximately 310 basis points sequentially and decreased approximately 210 basis points year-over-year, primarily due to 190 basis point contraction of gross margin compared to the second quarter of 2023. The decrease in gross margins compared to the prior year was a result of a few factors, including a growing portfolio where left revenue lagged UMV production, an increase in merchandise sales which represented a larger percentage of revenue compared to the prior year period, and the conversion of acceptance now locations to the SEMA platform, which increases merchandise depreciation expense in cost of goods sold.

Speaker Change: Operating costs, excluding lease charge-offs, were up on a dollar basis approximately $4.6 million in the second quarter, which was 60 basis points lower as a percentage of revenue.

Fahmi Karam: Adjusted EBITDA of $81.3 million was up 4.5% year-over-year, primarily due to the 19% increase in revenue that was partially offset by a 22.5% increase in cost of goods sold. Adjusted EBITDA margin of 14.7% increased approximately 310 basis points sequentially and decreased approximately 210 basis points year over year, primarily due to a 190 basis point contraction of gross margin compared to the second quarter of 2023. The decrease in gross margins compared to the prior year was the result of a few factors, including a growing portfolio where revenue lags GMV production, an increase in merchandise sales, which represented a larger percentage of revenue compared to the prior year period, and the conversion of Acceptance Now locations to the SEMA platform, which increases merchandise depreciation expense and cost of goods sold.

Speaker Change: Adjusted EBITDA of $81.3 million was up 4.5% year-over-year, primarily due to the 19% increase in revenue that was partially offset by a 22.5% increase in cost of goods sold.

Speaker Change: Adjusted EBITDA margin of 14.7%, increased approximately 310 basis points sequentially.

Speaker Change: primarily due to a 190 basis point contraction of gross margin compared to the second quarter of 2023.

Speaker Change: The decrease in gross margins compared to the prior year was the result of a few factors.

Speaker Change: including a growing portfolio where left revenue lags GMV production.

Fahmi Karam: Yvodav margins were impacted by higher labor costs, underwriting costs of application volume significantly surpassed a prior year, and the performance of the legacy A now portfolio increasing our LCO rate. All of these headwinds were in line with our expectations, were included in our guide for the year, and are expected to improve as we get into the second half of this year. For the Rent and Center segment, at quarter end, the same store lease portfolio value was up 1.4% year-over-year, while same-store sales increased 2.6% year-over-year, improving from an 80 basis point increase in the first quarter of 2024.

Fahmi Karam: EBITDA margins were impacted by higher labor costs, underwriting costs as application volume significantly surpassed the prior year, and the performance of the Legacy A-NOW portfolio increasing our LCO rate. All of these headwinds were in line with our expectations, are included in our guide for the year, and are expected to improve as we get into the second half of this year for the Rent-A-Center segment. At quarter end, the same-store lease portfolio value was up 1.4% year-over-year, while same-store sales increased 2.6% year-over-year, improving from an 80 basis point increase in the first quarter of 2024.

Speaker Change: EBITDA margins were impacted by higher labor costs, underwriting costs as application volume significantly surpassed the prior year, and the performance of the legacy ANOW portfolio increasing our LCO rate.

Fahmi Karam: Total segment revenue grew year-over-year for the second consecutive quarter, increasing 1.9% compared to the second quarter of 2023, and improving from a 20 basis point year-over-year increase in the first quarter of this year. The increase in revenue was driven primarily by a 2.1% year-over-year increase in rentals and fees revenue, while second quarter merchandise sales revenue increased 1.6% year-over-year and improvement from a 3.6% increase in the first quarter. Least charge-offs were 4.2% of revenue in the second quarter, 30 basis points lower year-over-year and 50 basis points lower sequentially, a result of ongoing underwriting and account management efforts.

Fahmi Karam: Total segment revenue grew year-over-year for the second consecutive quarter, increasing 1.9% compared to the second quarter of 2023 and improving from a 20-basis point year-over-year increase in the first quarter of this year. The increase in revenue was driven primarily by a 2.1% year-over-year increase in rental and fees revenue.

Speaker Change: Total segment revenue grew year-over-year for the second consecutive quarter, increasing 1.9% compared to the second quarter of 2023, and improving from a 20 basis point year-over-year increase in the first quarter of this year.

Speaker Change: The increase in revenue was driven primarily by a 2.1% year-over-year increase in rentals and fees revenue, while second quarter merchandise sales revenue increased 1.6% year-over-year, an improvement from a 3.6% decrease in the first quarter.

Fahmi Karam: While second quarter merchandise sales revenue increased 1.6% year-over-year, an improvement from a 3.6% decrease in the first quarter, these chargeoffs were 4.2% of revenue in the second quarter, 30 basis points lower year over year, and 50 basis points lower sequentially, as a result of ongoing underwriting and account management efforts. 30-day past-due rates averaged 2.7% for the second quarter, up 10 basis points from the prior year period and 40 basis points lower sequentially. Adjusted EBITDA margin for the second quarter decreased 160 basis points year-over-year to 16.3%, primarily due to higher operating expenses, including elevated labor benefit costs, delivery costs, and SOAR technology.

Speaker Change: These charge-offs were 4.2% of revenue in the second quarter, 30 basis points lower year-over-year and 50 basis points lower sequentially, a result of ongoing underwriting and account management efforts.

Fahmi Karam: 30-day pass-through rates averaged 2.7% for the second quarter, up 10 basis points from the prior year period, and 40 basis points lower sequentially. Adjusted EBITDA margin for the second quarter decreased 160 basis points year-over-year to 16.3%. Primarily due to higher operating expenses, including elevated labor benefit costs, delivery costs, and sore technology investments. This is reflected by a 150 basis point year-over-year increase in the ratio of non-GAAP operating expenses, excluding lease charge-offs, to segment revenue.

Speaker Change: 30-day past-due rates averaged 2.7% for the second quarter, up 10 basis points from the prior year period and 40 basis points lower sequentially.

Fahmi Karam: This is reflected by a 150 basis point year-over-year increase in the ratio of non-GAAP operating expenses excluding lease charge-offs to segment revenue. For the Mexico segment, Adjusted EBITDA was higher year over year, and the Franchise segment's Adjusted EBITDA was lower. Non-GAAP corporate expenses were approximately 7% higher compared to the prior year, primarily due to additional investments in technology. Shifting to the Financial Outlook. Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment, we are pleased to raise the midpoint of our full year 2024 targets for revenue, adjusted EBITDA, and non-gas diluted EPS.

Fahmi Karam: For the Mexico segment, adjusted EBITDA was higher year-over-year, and a franchise segment adjusted EBITDA was lower. Non-GAAP corporate expenses were approximately 7% higher compared to the prior year, primarily due to additional investments in technology and people.

Speaker Change: For the Mexico segment, adjusted EBITDA was higher year-over-year, and the franchise segment's adjusted EBITDA was lower.

Fahmi Karam: Shifting to the financial outlook. Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment, we are pleased to raise the midpoint of our full year 2024 targets for revenue, adjusted EBITDA, and non-GAAP saluted EPS. Our portfolio and GMB growth, coupled with low delinquencies, give us confidence that we can improve margins in the second half of the year and achieve these updated targets. Our forecast continues to assume a generally stable macro environment with durable goods demanding under pressure and continued discipline in our underwriting. At a FEMA, we'll start comping against higher growth rates in the third quarter, so we expect GMB growth to drop from the 20% area we've achieved for three consecutive quarters to low-double digits in the upcoming quarter.

Speaker Change: Shifting to the Financial Outlook

Speaker Change: Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment, we are pleased to raise the midpoint of our full year 2024 targets for revenue, adjusted EBITDA, and non-GAAP diluted EPS.

Fahmi Karam: Our portfolio and GMB growth, coupled with low delinquencies, give us confidence that we can improve margins in the second half of the year and achieve these updated targets. Our forecast continues to assume a generally stable macro environment with durable goods demand remaining under pressure and Continued Discipline in our underwriting.

Speaker Change: Our forecast continues to assume a generally stable macro environment with durable goods demand remaining under pressure and continued discipline in our underwriting.

Fahmi Karam: At AFIMA, we'll start comping against higher growth rates in the third quarter, so we expect GMB growth to drop from the 20% area we've achieved for three consecutive quarters to low double digits in the upcoming quarter. Rent-A-Center's portfolio value is expected to seasonally drop in the third quarter from the second quarter, similar to the prior year.

Speaker Change: At ASEMA, we'll start comping against higher growth rates in the third quarter, so we expect GMV growth to drop from the 20% area we've achieved for three consecutive quarters to low double digits in the upcoming quarter.

Fahmi Karam: Renaissance portfolio value is expected to seasonally drop in the third quarter from the second quarter, similar to the prior year. For both the FEMA and Renaissance Center, we expect third quarter revenue to follow the same sequential pattern as in 2023, with a slight increase sequentially at FEMA due to a growing portfolio. We expect losses to remain within our previous guidance commentary for the year, with Renaissance Center experiencing a typical seasonal uptick in the third quarter from the second quarter and to be in the four and a half percent range. A FEMA losses are expected to improve in the third quarter as the legacy A now portfolio continues to wind down and finish in a 9% area for the quarter.

Speaker Change: Rent-A-Center's portfolio value is expected to seasonally drop in the third quarter from the second quarter, similar to the prior year.

Fahmi Karam: For both the SEMA and Rent-A-Center, we expect third-quarter revenue to follow the same sequential pattern as in 2023, with a slight increase sequentially at SEMA due to a growing portfolio. We expect losses to remain within our previous guidance commentary for the year, with Rent-A-Center experiencing a typical seasonal uptick in the third quarter from the second, and to be in the four and a half percent range. FEMA losses are expected to improve in the third quarter as the Legacy A-NOW portfolio continues to wind down and finish in the 9% area for the quarter.

Speaker Change: For both the ACIMA and Rent-A-Center, we expect third quarter revenue to follow the same sequential pattern as in 2023, with a slight increase sequentially at ACIMA due to a growing portfolio.

Speaker Change: ASEMA losses are expected to improve in the third quarter as the legacy ANOW portfolio continues to wind down and finish in the 9% area for the quarter.

Fahmi Karam: In terms of adjusted EBITDA margins for the third quarter, the Renaissance segment will follow a similar seasonal trend from Q2 to Q3 as we experienced last year and be down sequentially to the mid-teens area. The store optimization efforts this past quarter will have a minimal impact to the financials for the year, with pressure on total segment revenues offset by lower expenses, which should slightly improve adjusted EBITDA margins going forward. We expect a SEMA to realize an improvement in adjusted EBITDA margins sequentially, as flow through from higher GMV continues to benefit the P&L and from lower loss rates.

Fahmi Karam: In terms of adjusted EBITDA margins for the third quarter, the Rent-A-Center segment will follow a similar seasonal trend from Q2 to Q3, as we experienced last year, and will be down sequentially to the mid-teens area. Your store optimization efforts this past quarter will have a minimal impact on the financials for the year. The pressure on total segment revenues will be offset by lower expenses, which should slightly improve adjusted EBITDA margins going forward. We expect ASEMA to realize an improvement in adjusted EBITDA margin sequentially, as flow-through from higher GMV continues to benefit the P&L and from lower losses. If trade-down activity continues to expand, GMV could improve from our guidance today. We are assuming a fully diluted average share count of 55.8 million shares for the quarter, with no share repurchases assumed in our guidance.

Speaker Change: In terms of adjusted EBITDA margins for the third quarter, the Rent-A-Center segment will follow a similar seasonal trend from Q2 to Q3, as we experienced last year, and be down sequentially to the mid-teens area.

Speaker Change: The store optimization efforts this past quarter will have a minimal impact to the financials for the year, with pressure on total segment revenues offset by lower expenses, which should slightly improve adjusted EBITDA margins going forward.

Speaker Change: We expect Acima to realize an improvement in adjusted EBITDA margins sequentially, as flow-through from higher GMV continues to benefit the P&L and from lower loss rates.

Fahmi Karam: If trade-down activity continues to expand, GMV could improve from our guidance today. We are assuming a fully diluted average share count of 55.8 million shares for the quarter, with no share repurchases assumed in our guidance. Interest expense in our tax rates are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of $0.90 to $1.00. For the quarter, we expect to generate 60 to 75 million of free cash flow and increase sequentially to the pace of growth changing at a SEMA, lower inventory purchases at Renaissance Center, and timing related to other working capital needs that were recorded in the second quarter.

Speaker Change: If trade-down activity continues to expand, GMV could improve from our guidance today.

Fahmi Karam: Interest expense and our tax rate are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of $0.90 to $1. For the quarter, we expect to generate $60 to $75 million of free cash flow, and it will increase sequentially due to the pace of growth changing at Acima, lower inventory purchases at Rent-A-Center, and timing related to other working capital needs that were recorded in the second quarter.

Speaker Change: Interest expense and our tax rate are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of $0.90 to $1.

Speaker Change: For the quarter, we expect to generate $60 to $75 million of free cash flow and increase sequentially due to the pace of growth changing at Acima, lower inventory purchases at Rent-A-Center, and timing related to other working capital needs that were recorded in the second quarter.

Fahmi Karam: For the year, we are revising revenues to be in the 4.1 billion to 4.3 billion range, adjusted EBITDA to be 465 million to 485 million, and we're tightening our fully year guide to a non-GAAP EPS to a range of $3.65 per share to $4.00 per share. Our 2024 outlook reflects our continued focus on execution to drive sustainable and profitable growth. The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue, a 5% increase in adjusted EBITDA, and an 8% increase in non-GAAP EPS with no share repurchases assumed. Our ability to navigate this challenging environment and generate earnings growth at both segments while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value.

Fahmi Karam: For the year, we are revising revenues to be in the $4.1 billion to $4.3 billion range, and adjusted EBITDA to be $465 million to $485 million. And we're tightening our full-year guide for non-GAAP ETFs to a range of $3.65 per share to $4 per share.

Speaker Change: For the year, we are revising revenues to be in the $4.1 billion to $4.3 billion range.

Speaker Change: Adjusted EBITDA to be $465 million to $485 million.

Speaker Change: And we're tightening our full year guide of non-GAAP ETFs to a range of $3.65 per share to $4 per share.

Fahmi Karam: Our 2024 outlook reflects our continued focus on execution to drive sustainable and profitable growth. The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue, a 5% increase in adjusted EBITDA, and an 8% increase in non-GAAP EPS with no share repurchases assumed. Our ability to navigate this challenging environment and generate earnings growth in both segments while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value.

Speaker Change: Our 2024 outlook reflects our continued focus on execution to drive sustainable and profitable growth.

Speaker Change: The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue, a 5% increase in adjusted EBITDA, and an 8% increase in non-GAAP EPS with no share repurchases assumed.

Speaker Change: Our ability to navigate this challenging environment and generate earnings growth at both segments while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value.

Fahmi Karam: In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time, and an experienced management team that allocates those cash flows in support of our strategic priorities. Our first priority continues to be supporting growth with profitable leases and innovative ideas that will improve our customer interactions and merchant outcomes. Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchases. On place to share that during the second quarter, we optimize our capital structure and support of our long-term capital allocation priorities.

Fahmi Karam: In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time and an experienced management team that allocates those cash flows in support of our strategic priorities. Our first priority continues to be supporting growth with profitable leases and innovative ideas that will improve our customer interactions and merchant out. Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchase.

Speaker Change: In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time, and an experienced management team that allocates those cash flows in support of our strategic priorities.

Speaker Change: Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchases.

Fahmi Karam: I'm pleased to share that during the second quarter, we optimized our capital structure in support of our long-term capital allocation priorities, capitalizing on our strong recent performance and favorable market conditions. We refinanced our term loan debt, which resulted in over 60 basis points of annual interest savings, while also extending the maturity of our $550 million ABL revolver through 2029.

Fahmi Karam: Capitalizing on our strong recent performance and favorable market conditions, we refinance our term loan debt, which resulted in over 60 basis points of annual interest savings. While also extending the maturity of our 550 million ABL revolver through 2029. Combined, these enhancements to our capital structure secure our liquidity position while reducing the cost of capital for the company. We expect the balance of our free cash flow this year will go towards deleveraging as we progress toward a net leverage ratio of under two times and toward our long-term target of one and a half times. We ended the second quarter at 2.8 times, up from 2.7 times at the end of the first quarter, due to an increase in working capital needs to support GNV growth.

Speaker Change: catalyzing on our strong recent performance and favorable market conditions

Speaker Change: We refinanced our term loan debt, which resulted in over 60 basis points of annual interest savings, while also extending the maturity of our $550 million ABL revolver through 2029.

Fahmi Karam: Combined, these enhancements to our capital structure secure our liquidity position while reducing the cost of capital for the company. We expect the balance of our free cash flow this year will go towards deleveraging as we progress toward a net leverage ratio of under two times and toward our long-term target of one and a half times. We ended the second quarter at 2.8 times, up from 2.7 times at the end of the first, due to an increase in working capital needs to support GMB growth.

Speaker Change: Combined, these enhancements to our capital structure secure our liquidity position while reducing the cost of capital for the company.

Speaker Change: We expect the balance of our free cash flow this year will go towards deleveraging as we progress toward the net leverage ratio of under two times and toward our long-term target of one and a half times.

Speaker Change: We ended the second quarter at 2.8 times up from 2.7 times at the end of the first quarter due to an increase in working capital needs to support GMV growth.

Fahmi Karam: The strength of our balance sheet helps to insulate us from market volatility and enables us to act confidently and decisively when pursuing our strategic priorities. As a quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest or impure the broader uncertainty, whether supporting our home grown initiatives or targeted in organic opportunities.

Fahmi Karam: The strength of our balance sheet helps to insulate us from market volatility and enables us to act confidently and decisively when pursuing our strategic priorities. As of quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest during periods of broader uncertainty, whether supporting our homegrown initiatives or targeted inorganic opportunities. Wrapping up on slide 11.

Speaker Change: The strength of our balance sheet helps to insulate us from market volatility and enables us to act confidently and decisively when pursuing our strategic priorities.

Speaker Change: As of quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest during periods of broader uncertainty, whether supporting our homegrown initiatives or targeted inorganic opportunities.

Fahmi Karam: Rapping up on slide 11. We're encouraged by the company's sustainable minimum across the first half of this year, which included top-line growth at both primary segments. GNV growth at a SEMA and same-source sales growth at Renner Center and importantly, a notable improvement in Jeffery Bada Margin at a SEMA in line with our low to mid-teens target. Our prudent risk management and account management strategies help deliver loss rates that were in line with our expectations and allowed us to raise the mid-point of our guidance as we look out across the balance of the year. Going forward, we will continue to execute against our day-to-day priorities to serve our customers and elevate our retail partners' businesses while pushing forward with new ideas and business strategies that will help us achieve our long-term growth plans.

Operator: We're encouraged by the company's sustained momentum across the first half of this year, which included top-line growth at both primary segments, GMV growth at Acima and same-store sales growth at Rent-A-Center, and importantly, a notable improvement in adjusted EBITDA margins at Acima, in line with our low-to-mid-teens target. Our prudent risk management and account management strategies helped deliver loss rates that were in line with our expectations and allowed us to raise the midpoint of our guidance as we look out across the balance of the. Going forward, we will continue to execute against our day-to-day priorities to serve our customers and elevate our retail partners' business, while pushing forward with new ideas and business strategies that will help us achieve our long-term growth. Thank you for your time this morning.

Speaker Change: Wrapping up on slide 11.

Speaker Change: which included top-line growth at both primary segments, GMV growth at Acima, and same-store sales growth at Rent-A-Center, and importantly, a notable improvement in adjusted EBITDA margins at Acima, in line with our low-to-mid-teens target.

Speaker Change: Our prudent risk management and account management strategies helped deliver loss rates that were in line with our expectations and allowed us to raise the midpoint of our guidance as we look out across the balance of the year.

Speaker Change: Going forward, we will continue to execute against our day-to-day priorities to serve our customers and elevate our retail partners' businesses.

Speaker Change: While pushing forward with new ideas and business strategies that will help us achieve our long-term growth plans.

Fahmi Karam: Thank you for your time this morning.

Operator: Operator, you may now open the line for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. Please stand by while we compile the Q&A roster. The first question will come from Cain and will come from, sorry about that, Vincent Caintic.

Operator: Operator, you may now open the line for questions. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your need to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Speaker Change: Thank you for your time this morning. Operator, you may now open the line for questions.

Vincent Caintic: The first question will come from Kane. We'll come from. Sorry about that. Vincent, Kane tick.

Speaker Change: The first question will come from Kane.

Vincent Caintic: Vincent, your line is open. Hi, good morning. Thanks for taking my questions and for the great results this quarter. First, I wanted to focus on that trade-down opportunity you discussed, and it was very encouraging to see that 35% higher application. I'm wondering if you could talk about how much that's lifting your business so far, the trade-down opportunity, if you see more of it. And then you brought up Concora, and I was just wondering if there are opportunities to grow that with this trade-down opportunity, or if there are other ways to take advantage of that. Yeah, good morning, Vincent. This is Mitch.

Speaker Change: will come from, sorry about that, Vincent Caintic. Vincent, your line is open. Hi, good morning. Thanks for taking my questions and great results this quarter.

Vincent Caintic: Vincent, your line is open.

Vincent Caintic: Hi, good morning. Thanks for taking my questions and great results this quarter. First one of the focus on that trade-down opportunity you've discussed, and it was very encouraging to see that 35% higher applications. I'm wondering if you could talk about how much that's lifting your business so far.

Vincent Caintic: First, I wanted to focus on that trade-down opportunity you've discussed, and it was very encouraging to see that 35% higher applications.

Vincent Caintic: I'm wondering if you could talk about how much that's lifting your business so far, the trade-down opportunity, or if you see more of it.

Vincent Caintic: The trade-down opportunity, if you see more of it, and then you brought up Concora, and I was just wondering if there are opportunities to throw that with this trade-down opportunity or if there's other ways to take advantage of that. Thank you.

Mitch Fadel: Good morning, Vincent to Smith. Thanks for the questions. Yeah, the trade-down is certainly front and center when we look at everything, everything, all the data, and certainly the advantage scores and things like that. And of course, you're hearing it, you're hearing it throughout different businesses, and we're certainly no exception with those 35% applications. You know, when you say how much comes from one place versus the other, we think about, you know, 10% growth in merchants, 50% growth on their direct and consumer, which is a small piece but it still drives some of that 21% GMV growth.

Mitch Fadel: Thanks for the question. Yeah, the trade down is certainly, certainly front and center when we look at everything, everything, all the data, and certainly the vantage scores and things like that. And, of course, you're hearing it throughout, throughout different businesses. And we're certainly no exception.

Speaker Change: Yeah, the trade-down is certainly front and center when we look at everything, all the data and certainly the vantage scores and things like that, and of course you're hearing it throughout different businesses, and we're certainly no exception. With those 35% applications,

Mitch Fadel: With those 35% applications, you know, when you say how much comes from one place versus the other, we think about, you know, 10% growth in merchants. [inaudible] 50% growth on their direct-to-consumer business, which is a small piece, but it still drives some of that 21% GMB growth. So, and then the productivity of the merchants really is where the trade down comes in, as well as our teams just doing a better job training those merchants and getting in first position in those stores or exclusivity and so forth.

Speaker Change: You know, when you say how much comes from one place versus the other, we think about 10% growth in merchants.

Speaker Change: Yeah.

Speaker Change: 50% growth on their direct-to-consumer, which is a small piece, but it still drives some of that 21% GMB growth.

Mitch Fadel: So, you know, and then the productivity of the merchants really is where the trade down comes in, as well as our teams just doing a better job training those merchants and getting in first position in those stores or exclusivity and so forth. So, I don't know if I had to break down 21%, you know, tens with new merchants, you know, one or two maybe is coming from the direct to consumer, even though that's 50% growth is a small number. And, you know, the rest is a combination of the trade down and our sales team working with those merchants to get in better position.

Speaker Change: So, you know, and then the productivity of the merchants really is where the trade-down comes in, as well as our teams just doing a better job training those merchants and getting in first position in those stores or exclusivity and so forth. So,

Mitch Fadel: So, I don't know if I had to break down 21%, you know, tens with new merchants. You know, one or two maybe are coming from the direct-to-consumer, even though that's 50% growth, it's a small number, you know, the rest is a combination of the trade down and our sales team working with those merchants to get in a better position. So, you know, maybe it's somewhere between, I don't know, Fahmi, 30% and 40% of the 21%. It's kind of hard to put a number on it, but it's definitely a part of it.

Mitch Fadel: So, you know, maybe it's somewhere between, I don't know, family 30 and 40% of the 21% is kind of hard to put a number on, but it's definitely part of it. Yeah, I would say the way I break down the growth in GMV, and I think you covered it, which is, you know, about 50% of it, or just under 50% of it, came from new merchant locations, yeah. 5% of it came from the direct to consumer and the marketplace growth, and the right hand it came from merchant productivity, and that's probably where you see some of the trade down impact.

Mitch Fadel: Yeah, I would say the way I would break down the growth in GMB, and I think you covered it, Mitch, which is about 50% of it, or just under 50% of it came from new merchant locations.

Speaker Change: Yeah, I would say the way I would break down the growth in GMB, and I think you covered it, Mitch, which is, you know, about 50% of it, or just under 50% of it came from new merchant locations. Yeah.

Mitch Fadel: 5% of it came from direct-to-consumer and marketplace growth, and the rest of it came from merchant productivity, and that's probably where you see some of the trade-down impact. I think maybe it's more like 25% of our growth, 25, 30, 40, somewhere in that range, but it's not like 1% or 2%, it's definitely real, and we would expect it to continue. And if it accelerates, then there's even upside to our numbers. And the Concurah question.

Mitch Fadel: Yeah, so maybe it's more like 25% of our growth, 25, 30, 40, somewhere in that range, but it's not like 1 or 2%, it's definitely real, and we would continue, we'd expect it to continue and it accelerates, then there's even upside to our numbers. And the concurra question, yes, I think with the second look provider, because it's still a subprime offering or near prime offering with our retail partners, there's certainly a lot of interest in it as there's tightening above the near prime tightening with the prime lenders. So I think that does create opportunity, as we mentioned in our prepared comments. This family mentioned the retailers really like that we're hearing lots of good anecdotal stories about liking the one stop shopping and those kinds of things, so it's kind of just taking off. But yeah, we do think that creates opportunity in this environment.

Mitch: 40, somewhere in that range. But it's not like one or two percent. It's definitely real, and we would expect it to continue. And if it accelerates, then there's even upside to our numbers.

Speaker Change: And the Concurah question.

Mitch Fadel: Yes, I think with the second look provider, because it's still a subprime offering or near prime offering with our retail partners, there's certainly a lot of interest in it as there's tightening above the near prime, and tightening with the prime lenders. So I think that does create opportunity. As we mentioned in our prepared comments, as Fahmi mentioned, retailers really like that we're hearing lots of good anecdotal stories about liking the one-stop shopping and those kind of things. So it's kind of just taking off, but yeah, we do think that creates opportunity in this environment. Okay, great.

Speaker Change: Second look provider, because it's still a subprime offering or near prime offering with our retail partners. There's certainly a lot of interest in it as there's tightening above the near prime, tightening with the prime lenders. So I think that does create opportunity.

Speaker Change: As we mentioned in our prepared comments, as Fahmi mentioned, the retailers really like the... We're hearing lots of good anecdotal stories about liking the one-stop shopping and those kind of things. So it's kind of just taking off, but yeah, we do think that creates opportunity in this environment.

Mitch Fadel: Okay, great, that's very helpful and actually following up, it's a good segue. Just I want to get a sense of maybe the merchant engagement and if any of those merchant discussions have evolved and changed. I guess to your point about, you know, if there's trading down and what's happening is that the higher credit providers are tightening up, and I would assume that there would be more merchant need for your product. So if you could maybe talk about merchant engagement now, that's the opportunities there. Thank you.

Mitch Fadel: That's very helpful. And actually, following up, it's a good segue, just, I want to get a sense of maybe the merchant engagement and if any of those merchant discussions have evolved and changed. I guess, to your point about, you know, if there's trading down, and what's happening is that the higher credit providers are tightening up, and I would assume that there'd be more merchant need for your product. So, if you could maybe talk about merchant engagement now that the opportunity is there,

Speaker Change: Okay great that's very helpful and actually following up it's a good segue just I want to get a sense of

Mitch Fadel: Yeah, I think that's certainly happening with our. It's from an SMB standpoint, when you think about 10% that merchant growth year over year. You think about a couple of the signing just last quarter, a couple of the top 50 furniture retailers like Levin and Slumberland. And more in the pipeline, so yeah, I think that's definitely happening. The pipeline is robust; the team, the team is doing a great job bringing in new partners. Obviously, the bigger the partner, the longer the cycle runs, but the regionals are bringing in, and the SMBs are bringing in.

Mitch Fadel: Yeah, I think that's certainly happening. From an SMB standpoint, when you think about 10% net merchant growth year over year, you think about a couple of the signings just last quarter, a couple of the top 50 furniture retailers like Levin and Slumberland, and more in the pipeline. So, yeah, I think that's definitely happening. The pipeline is robust.

Mitch Fadel: The team at Acima is doing a great job bringing in new partners. Obviously, the bigger the partner, the longer the cycle runs, but the regionals they're bringing in and the SMBs they're bringing in, they're just doing an excellent job. Okay, great.

Speaker Change: The team at Acima is doing a great job bringing in new partners. Obviously, the bigger the partner, the longer their cycle runs, but the regionals they're bringing in and the SMBs they're bringing in, they're just doing an excellent job.

Mitch Fadel: They're just, they're just doing an excellent job. Okay, great, very helpful. Thank you.

Vincent Caintic: Very helpful. Thank you. Thanks, Vincent.

Operator: Thanks, Vincent. Thank you. Please stand by for the next question.

Speaker Change: Okay, great. Very helpful. Thank you.

Operator: Thank you. Please stand by for the next question. The next question comes from Hoang Nguyen with TD Cowen. Your line is now open.

Hoang Nguyen: The next question comes from Hoang Nguyen with TD Cowan. Your line is now open.

Speaker Change: The next question comes from Hoang Nguyen with TD Cowen. Your line is now open.

Hoang Nguyen: Hi, team. Congratulations on the quarter. Just want to touch on the guidance. Looks like you guys raised the high end revenue guidance, but I mean, didn't raise the high end for EBITDA and EPS. I mean, can you touch a little bit on the rationale behind that? I mean, does it have to do with more mix of merchandise sales versus rental and have a follow-up?

Hoang Nguyen: Hi team, and congratulations on the quarter. Just wanted to touch on the guidance. Looks like you guys raised the high-end revenue guidance but didn't raise the high-end for EBITDA and EPS. Can you touch a little bit on the rationale behind that? I mean, does it have to do with more mix of merchandise sales versus rental? And have a follow-up. Good morning, Hoang.

Hoang Nguyen: Hi team and congratulations on the quarter. I just want to touch on the guidance. Looks like you guys raised the high-end revenue guidance but I mean didn't raise a high-end for EBITDA and

Speaker Change: EPS. I mean, can you touch a little bit on, you know, the rationale behind that? I mean, does it have to do with more mix of merchandise sales versus rental? And have a follow-up.

Fahmi Karam: Good morning, Hoang. Thanks for the question. Yeah, I think the guide for the year, especially on the revenue side, really reflects the GMV growth that we've experienced over the last couple of quarters, obviously. The third quarter in a row where we had nearly 20% growth in GMV, and we started to reflect that now into the revenue guide. As far as the margin profile goes, I think we talked a little bit about it last time as far as having some really tough comps coming in to the year, especially in the first half. We think that improves when we get into the second half, especially on the ACIMA side.

Fahmi Karam: Thanks for the question. Yeah, I think the guide for the year, especially on the revenue side, really reflects the GMV growth that we've experienced over the last couple quarters. Obviously, this is the third quarter in a row where we've had nearly 20% growth in GMV, and we've started to reflect that now in the revenue guide. As far as the margin profile goes, I think we talked about it a little bit last time as far as having some really tough comps coming into the year, especially in the first half. We think that it improves when we get into the second half, especially on the ASEMA side.

Speaker Change: Morning Hoang, thanks for thanks for the question. Yeah, I think the the guide for the year Especially on the revenue side really reflects the GMB growth that we've experienced over the last couple quarters. Obviously, this is a

Speaker Change: The third quarter in a row where we've had nearly 20% growth in GMV, and we've started to reflect that now into...

Speaker Change: into the revenue guide. As far as the margin profile goes, I think we talked a little bit about it last time, as far as...

Speaker Change: Having some really tough comps coming into the year, especially in the first half. We think that improves when we get into the second half, especially on the Acima side. On the Acima side, Q2, we started to see some of that flow through from GMV come into play. So Q2 was better than Q1. We expect Q3 to be better than Q2. And so nothing really as far as the mix goes.

Fahmi Karam: On the ACIMA side, Q2 started to see some of that flow through from GMV come into play, so Q2 was better than Q1, and we expect Q3 to be better than Q2. Nothing really for as far as the mix goes, just more where the trends have been heading towards the margin profile for the year and then where revenues come again. I think for Q3, the guide is consistent and will be up on the revenue side and flat, slightly better on the margin side. As we talked about last quarter, the margins stick a little longer to catch up with the large GMV growth.

Mitch Fadel: On the ASEMA side, Q2, we started to see some of that flow through from GMV come into play, so Q2 was better than Q1, and we expect Q3 to be better than Q2. Nothing really as far as the mix goes, just more kind of where the trends have been heading towards the margin profile for the year, and then where revenue's coming in. I think for Q3, the guide is consistent. We'll be up on the revenue side and then flat to slightly better on the margin side.

Speaker Change: Just more kind of where the trends have been heading towards the margin profile for the year and then where revenue is coming in. I think for Q3 the guide is consistent. We'll be up on the revenue side and then flat slightly better on the margin side.

Mitch Fadel: Yeah, I think I'd add to that, Hoang, this is Mitch. As Fahmi mentioned, You know, as we talked about last quarter, the margins take a little longer to catch up with the large GMV growth we saw this quarter, right, with the 310 basis point improvement and in a seamless EBITDA margin. So you're starting to see that flow through and there's more to come, but it does run a little behind the revenue is kind of the short answer to your question. And I'd also say.

Speaker Change: Yeah, I think I'd add to that, Hoang, this is Mitch, as Fahmi mentioned,

Mitch: You know, as we talked about last quarter, the margins take a little longer to catch up with the large GMV growth we saw this quarter, right, with the 310 basis point improvement.

Fahmi Karam: We saw this quarter with the 310 basis point improvement in ACIMA's EBITDA margin, so you start to see that flow through, and there's more to come, but it does run a little behind the revenues. Q2 was kind of the short answer to your question, and I also say from a guidance standpoint, yet to remember, we had a lot of momentum going into the year. In the fourth quarter, we had almost 20% GMV growth in ACIMA and run the center of starting to turn positive on the same sort of sales. We had momentum, and we knew it was going to carry over.

Mitch: in a SEMA EBITDA margin. So you're starting to see that flow through and there's more to come, but it does run a little behind the revenue is kind of the short answer to your question. And I'd also say.

Mitch Fadel: From a guidance standpoint, you've got to remember we... We had a lot of momentum going into the year. In the fourth quarter, we had almost 20% GMV growth at Acima. And in Renison, it was starting to turn positive for same-store sales. So we had momentum, and we knew it was going to carry over.

Speaker Change: From a guidance standpoint,

Speaker Change: You've got to remember...

Speaker Change: We.

Speaker Change: We had a lot of momentum going into the year. In the fourth quarter, we had almost 20% GMV growth at Acima, and Renison was starting to turn positive on the same-store sales. So we had momentum, and we knew it was going to carry over.

Mitch Fadel: We saw trade down, those kinds of things. And our original guide was relatively stout when you think about the revenue. In our original guide, revenue was up 3% year over year, and the EPS was up about 6%. And now we've updated it. And I'm just talking midpoints when I say this. Now revenue, instead of 3% year over year, it's 5%. And EPS, instead of 6% above last year, is 8%. So we started out with pretty high numbers. We have a small raise here, but I just want to remind everybody that we started out pretty high with 3% year over year on revenue. Now it's 5%. And EPS was at 6%. Now it's 8%.

Fahmi Karam: We saw trade-down coming; those kind of things. Our original guide was relatively stout when you think about the revenue. Our original guide, the revenue was up 3% year over year, and the EPS was about 6%. Now we've updated it, and I'm just talking midpoints when I say this, and now revenue, instead of 3% year over year, is 5%, and EPS, instead of 6% above last year, is 8%. We started out with pretty high numbers. We have a small raise here, but I just want to remind everybody we started out pretty high with the 3% year over year.

Speaker Change: We saw trade down coming those kind of things and our original guide was

Speaker Change: Relatively stout. When you think about the revenue, our original guide, the revenue was up 3% year-over-year and the EPS was up about 6% and now we've updated it and I'm just talking midpoints when I say this and now revenue

Speaker Change: Instead of 3% year-over-year, it's 5% in EPS instead of...

Speaker Change: 6% above last year at 8%. So we started out with pretty high numbers.

Speaker Change: We have a small raise here, but I just want to remind everybody, we started out pretty high with the 3% year-over-year on the revenue, now it's 5%, and EPS at 6%, now it's 8%, and as trade-down continues, you know, we hope to outperform, but...

Fahmi Karam: We're trying to revenue now at 5% and EPS at 6%, and now it's 8%. As trade-down continues, we hope to outperform. We're pretty excited about the flow through. We're starting to see now, as I mentioned with that, when you look at the Assima margins compared to the first quarter.

Mitch Fadel: And as trade down continues, we hope to outperform. But, we're pretty excited about the flow-through. We're starting to see now, as I mentioned with that, when you look at the ASEMA margins compared to the first quarter, got it, and maybe you can talk a little bit about the court fight with the CFPB. You guys sued them in Texas. They sued back in Utah.

Speaker Change: We're pretty excited about the flow through. We're starting to see now as I mentioned with that when you look at the ASEMA margins compared to the first quarter.

Mitch Fadel: Got it, and maybe if you can talk a little bit about the court fight with the CFPB. You guys sued them in Texas; they sued back in Utah. I mean can you talk high level about the next step in the process maybe in terms of the venue and you know what's the next milestone will be thank you. Well, I can't, you know, with ongoing litigation, you can't say a lot to my parent; comments have to suffice. As I said, my prepared comments, you know, we think they're a form shopping by filing in it in Utah when there was already our case pending in Texas addressing the same, the same subject. So we'll strongly contest their claims and defend ourselves and defend ourselves from them trying to, you know, take over state regulatory framework that's governed our industry for, for a long time. Like I said, my prepared comments, but as far as next steps and all that, we'll have to leave it at that rather than get into a legal discussion about next steps. As you know, I'm not an attorney, and of course, they'd yell at me if I say more than I've already said. Anyhow, so we'll have to leave it at that.

Speaker Change: Got it. And maybe if you can talk a little bit about the...

Speaker Change: The court fight with the CFPB, you guys sued them in Texas, they sued back in Utah. I mean, can you talk high level about the next step in the process? Maybe in terms of the venue and, you know, what's the next milestone will be? Thank you.

Mitch Fadel: I mean, can you talk at a high level about the next step in the process? I mean, maybe in terms of the venue and, you know, what the next milestone will be? Thank you. Well, I can't, you know, with ongoing litigation, you can't say a lot of my prepared comments have to suffice.

Speaker Change: Well I can't, you know, with ongoing litigation you can't say a lot. My prepared comments have to suffice. As I said, my prepared comments, you know, we think they're...

Mitch Fadel: As I said, in my prepared comments, you know, we think they're form shopping by filing this in Utah when there was already our case pending in Texas addressing the same, the same subject. So we will strongly contest their claims and defend ourselves and defend ourselves from them trying to, you know, take over the state regulatory framework that's governed our industry for a long time.

Speaker Change: They're form shopping by filing in Utah when there was already our case pending in Texas addressing the same subject. So we'll strongly contest their claims and defend ourselves and defend ourselves from them trying to, you know.

Speaker Change: Take over state regulatory framework that's governed our industry for for a long time Like I said my prepared comments but as far as next steps and all that we'll have to leave it at that rather than get into a legal discussion about next steps as you

Mitch Fadel: But as far as next steps and all that, we'll have to leave it at that rather than get into a legal discussion about next steps, as you know, I'm not an attorney. And, of course, they'd yell at me if I said more than I've already said.

Speaker Change: I'm not an attorney, and of course they'd yell at me if I said any more than I've already said anyhow, so we'll have to leave it at that.

Mitch Fadel: So we'll have to leave it at that. Thank you. Thanks, Tom.

Mitch Fadel: Thank you. Thanks.

Bobby Griffin: Please stand by for the next question. The next question comes from Bobby Griffin with Raymond James. Your line is now open.

Speaker Change: Thank you.

Operator: Please stand by for the next question. The next question comes from Bobby Griffin with Raymond James. Your line is now open. Good morning, buddy.

Speaker Change: Thanks everyone.

Speaker Change: Please stand by for the next question.

Speaker Change: The next question comes from Bobby Griffin with Raymond James. Your line is now open.

Bobby Griffin: Good morning, buddy. Thank you for taking my questions, and congrats on another recorder of momentum. Thanks, Bobby.

Bobby Griffin: Good morning, everybody. Thanks for taking my questions and congrats on another good quarter of momentum.

Bobby Griffin: Thanks for taking my questions and congrats on another good quarter of momentum. Thanks, Bobby. So, Mitch, my first question really is kind of on that, on a high-level aspect. It seems, if we look at your results as well as some of the peers' results, the industry is really starting to see some inflection points, you know, whether it's on GMV growth, trade-down, portfolio performance, et cetera. What could potentially derail that, I guess, is the question.

Bobby Griffin: So Mitch, my first question really is kind of on that high level aspect. It seems if we look at your results as well as some other peers' results, the industry is really starting to see some inflection points, you know, whether it's on GMV growth, trade down, the portfolio performance, etc. What could potentially derail that, I guess, is the question. Is it just availability, a credit becoming more available again? Or like when you kind of sit here and you kind of think out on, you know, multi-quartered, even kind of a year basis, what do you worry about that could derail some of this momentum?

Speaker Change: Thanks, Bobby.

Speaker Change: So Mitch, my first question really is kind of on that, on a high-level aspect. It seems, if we look at your results as well as some of the peers' results, the industry is really starting to see some inflection points.

Speaker Change: You know, whether it's on GMV growth, trade down, the portfolio performance.

Speaker Change: et cetera.

Speaker Change: What could potentially derail that, I guess, is the question. Is it just availability of credit becoming more available again? Or, like, when you kind of sit here and you kind of think out on, you know, a multi-quarter and even kind of a year basis, what do you worry about that could derail some of this momentum?

Mitch Fadel: Is it just the availability of credit becoming more available again, or like when you kind of sit here and you kind of think out on, you know, a multi-quarter and even kind of... That's a good question. I see only, of course, I'm usually the optimist in the room, but I see only positive things coming, Bobby, with the trade down. We talk all the time about how resilient we are, and in a good economy, we did great. I mean, we're still trying to catch the record numbers we did with stimulus money. So when people have money, we do great too. So it's such a resilient model. I think you're seeing it now.

Mitch Fadel: That's a good question. I see only, of course, I'm not. I'm usually the optimist in the room, but I see only positive things coming, Bobby, with it with the trade down. Of course, we talk about all the time about how resilient we are in a good economy. We did great. I mean, we were still trying to catch the record numbers we did from stimulus money. So when people have money, we do great too. So it's such a resilient model. I think you're seeing it now also when, yes, some subprime traditional retail at subprime is having some headlands right with a lot of closures out there. But not the least owned industry. I mean, rent centers going positive as well as, of course, the alternative of a SEMA being within our retail partners is going strong, even though subprime retail, like I said, there's a lot of closures. So we're, that's the benefit of our lease on business model. It's there for all retailers for those customers that don't have the credit. You don't have to start out in the subprime store, but there's actually Paul Wins coming from even some of those closures I mentioned, probably when you think about for companies like, or segments like Renaissance Center. So I don't know, Bobby, I'm not really, I don't, I just worry about our strategy and things like that, and are we executing and talk to the team all the time about execution?

Speaker Change: That's a good question.

Speaker Change: I see only, of course I'm not, I'm usually the optimist in the room, but I see only positive things coming, Bobby, with the trade down. Of course...

Bobby Griffin: We talk about all the time about how resilient we are and in a good economy, we did great. I mean, we're still trying to catch the record numbers we did from stimulus money. So when people have money, we do great too. So it's such a resilient model. I think you're seeing it now.

Mitch Fadel: Also, when, yes, some subprime, traditional retail at subprime is having some headwinds, right, with a lot of closures out there, but not the least owned industry. I mean, Rent-A-Center is going positive, as well as, of course, the alternative of Acima being within our retail partners is going strong, even though subprime retail, like I said, there are a lot of closures. So we're That's the benefit of the lease-owned business model. It's there for all retailers, for those customers that don't have credit.

Speaker Change: Also, when, yes, some subprime, traditional retail at subprime is having some headwinds, right, with a lot of closures out there, but not the lead stone industry. I mean, rent-a-center's...

Speaker Change: going positive, as well as, of course, the alternative of Acima being within our retail partners is going strong, even though subprime retail, like I said, there's a lot of closures, so we're

Speaker Change: That's the benefit of the lease-owned business model. It's there for all retailers, for those customers that don't have the credit. You don't have to start out in a subprime store, but there's actually...

Mitch Fadel: You don't have to start out in a subprime store, with tailwinds coming from even, you know, some of those closures I mentioned, probably when you think about companies like or segments like Rent-A-Center. So, I don't know, Bobby, I'm not really, I just worry about our strategy and things like that.

Speaker Change: tailwinds coming from even you know some of those closures I mentioned probably what do you think about for companies like or segments like Rent-A-Center so I don't know Bobby I'm not really I don't

Mitch Fadel: And are we executing and talking to the team all the time about execution? I'm worried if we're taking advantage of every opportunity, things like that. But as far as something derailing the trends, I just, I don't see anything. There you go, that's helpful.

Bobby: I worry about our strategy and things like that, and are we executing, and talk to the team all the time about execution. I worry, are we taking advantage of every opportunity, things like that. But as far as something derailing the trends, I just...

Mitch Fadel: I worried, are we taking advantage of every opportunity, things like that, but as far as something derailing the trend, I just, I don't see anything.

Mitch Fadel: And I guess my second question is kind of a combination question just on the Acima side of the business. I mean, first, with the momentum that we now are seeing across the industry, and as well as your results, what are you seeing competitively? Is everybody still behaving from a competitive standpoint, because I know competition is tough out there? And then can you just define how you guys really define pipeline?

Mitch Fadel: That's helpful, and I guess my second question is kind of a combo question, just on the a seam aside of the business. I mean, first, you know, with the momentum that we now are seeing across the industry and as well as your results, what are you seeing competitively? Is everybody still behaving from a competitive standpoint, so that no competition is tough out there? And then can you just define how you guys really define pipeline, like what are those active merchants that are in conversation about actually engaging, or is it just a list of potential merchants? Like what exactly is in the pipeline, where we know, you know, how real it is, and you know, the timing, or maybe we can try to take an estimate at the time, and then become, you know, actual customers.

Bobby: I don't see any anything.

Speaker Change: That's helpful. And I guess my second question is kind of a combo question just on the Acima side of the business.

Speaker Change: You know, with the momentum that we now are seeing across the industry and as well as your results, what are you seeing competitively? Is everybody still behaving from a competitive standpoint because I know competition is tough out there?

Speaker Change: And then, can you just define how you guys...

Speaker Change: Really define pipeline like what are those active merchants that are in conversation about actually Engaging or is it just a list of potential merchants like what what exactly in the pipeline where we know you know how how real? It is and you know how you know the timing or maybe we can try to take an estimate the timing of them becoming You know actual customers

Mitch Fadel: When I say pipeline, I'm talking about active conversations, not just the list. You know, like last quarter, we talked about there's some good regional players in the pipeline, and then we end up signing Levin, Slumberland, Purple, iFit, things like that. Some of those are regional furniture players; obviously, Purple is more of a nationwide. He can play for matches, even though they do have some stores, and so forth. So it's, we're talking about active conversations, and of course our sales team field sales and insight sales, you know, a little over a hundred people. They're, they're, they got tons of conversations going on with the one and two and three sort of merchants, and they're, and they're, they're up 10%, you're, you're almost 10%, so they're, they're not going out of the park, it's, they, as they have for, for many years.

Mitch Fadel: Like, what are those active merchants that are in conversation about actually engaging? Or is it just a list of potential merchants? Like, what exactly is in the pipeline where we know, you know, how real it is?

Speaker Change: When I say pipeline, I'm talking about active conversations, not just a list, you know. Like last quarter, we talked about there's some good regional players in the pipeline, and then we end up signing Levin.

Speaker Change: Slumberland, Purple, iFit, things like that. Some of those are regional furniture players, obviously Purple's more of a nationwide e-com play for mattresses, even though they do have some stores.

Mitch Fadel: And you know, how, you know, the timing, or maybe we can try to take an estimate of the timing of them becoming, you know, actual. When I say pipeline, I'm talking about active conversations, not just the list. You know, like last quarter, we talked about there being some good regional players in the pipeline, and then we ended up signing Levin. Slumberland, Purple, iFit, things like that.

Mitch Fadel: Some of those are regional furniture players; obviously, Purple's more of a nationwide e-com play for mattresses, even though they do have some stores and so forth. So we're talking about active conversations and then, of course, our sales team of Field Sales and Insight Sales, you know, a little over 100 people. They've got tons of conversations going on with the one and two and three-star merchants, and they're up 10% year-over-year, almost 10%. So they're knocking it out of the park, as they have for many years. So competition is about the same. I wouldn't say competition has gotten any stiffer or crazier as far as offerings and things like that.

Speaker Change: field sales and inside sales, you know, a little over a hundred people.

Speaker Change: They've got tons of conversations going on with the 1 and 2 and 3 star merchants, and they're up 10% year-over-year, almost 10%, so they're knocking it out of the park.

Mitch Fadel: So, competition is about the same. I wouldn't say, I wouldn't say competition's gotten any stiffer or crazier, as far as offerings and things like that. I'd say that's been pretty consistent. Of course, competition on the rent center side is probably, probably less than it was when we think about the store closures that are happening out there with some of our, not even, not direct competitors, but, but indirect competitors that, that do business similarly with the same customers. So, as I mentioned earlier, we see some of those closures as opportunities, especially on the rent center side.

Speaker Change: As they have for many years. Competition is about the same. I wouldn't say competition has gotten any stiffer or crazier as far as offerings and things like that. I'd say it's been pretty consistent. Of course, competition on the Rent-A-Center side is probably...

Mitch Fadel: I'd say that's been pretty consistent. Of course, competition on the Rent-A-Center side is probably..., probably less than it was when we think about the store closures that are happening out there with some of our not even direct competitors, but indirect competitors that do business similarly with the same customers. So, as I mentioned earlier, we see some of those closures as opportunities, especially on the rent-a-center side. Thank you. Very helpful. Best of luck here for the remainder of the year. Thanks, Bobby.

Bobby: probably less than it was when we think about the store closures that are happening out there with some of our not even not direct competitors but but indirect competitors that do business

Bobby: Similarly with the same customers. So as I mentioned earlier, we see some of those closures as opportunities, especially on the Rent-A-Center side.

Bobby Griffin: Thank you. The very helpful best of luck here for the remainder of the year.

Speaker Change: Thank you. Very helpful. Best of luck here for the remainder of the year.

Operator: Thanks, Bobby. Please stand by for the next question.

Bobby Griffin: Please stand by for the next question. The next question comes from Brad Thomas with KeyBank Capital Markets. Brad, your line is open.

Bobby Griffin: Thanks, Bobby.

Speaker Change: Please stand by for the next question.

Brad Thomas: The next question comes from Brad Thomas with KeyBank Capital Markets. Brad, your line is open.

Speaker Change: The next question comes from Brad Thomas with KeyBank Capital Markets. Brad, your line is open.

Brad Thomas: Good morning, and let me add my congrats on some nice results here as well. I wanted to follow up more on the growth match. Yeah, absolutely well deserve. And with hoping you could add a little bit more perspective on what you're seeing from a category perspective.

Brad Thomas: Hi, good morning, and let me add my congratulations on some nice results here as well. I wanted to follow up a little bit more on the growth, Mitch. Yeah, absolutely. Well deserved.

Brad Thomas: Hi, good morning, and let me add my congrats on some nice results here as well.

Brad Thomas: I wanted to follow up a little bit more on the growth, Mitch. Yeah, absolutely, well-deserved, and was hoping you could add a little bit more perspective on what you're seeing from a category perspective, and I say that with the

Mitch Fadel: And I was hoping you could add a little bit more perspective on what you're seeing from a category perspective. And I say that with the knowledge that in many of your end markets, retailers are seeing very challenging trends, so I'm curious what you're seeing from a category perspective in terms of some of those dynamics like new merchant growth and what you're seeing from the D2C and productivity standpoint as well. Thank you. Morning, Brad. This is Fahmi.

Fahmi Karam: And I say that with the I've got a lot of knowledge that the many of your end markets, the retailers are seeing very challenged trends, so curious what you're seeing from a category of perspective in terms of some of those dynamics like new merchant growth and what you're seeing from the DBC and productivity standpoint as well. Thank you.

Speaker Change: knowledge that many of your end markets, the retailers are seeing very challenged trends. So curious what you're seeing from a category perspective in terms of some of those dynamics like new merchant growth.

Speaker Change: and what you're seeing from the D2C and productivity standpoint as well. Thank you.

Fahmi Karam: Morning, Brad.

Fahmi Karam: Yeah, I think from a category standpoint, I think it's been pretty steady year over year as far as our mix of where the GMV is coming from. But I would say that we are starting to see some, a greater mix coming through the e-comm channel, we've talked about Wayfair and actually.com. So we've seen a greater mix of e-comm, which tends for us to be heavier on the furniture side.

Fahmi Karam: This is Fahmi. Yeah. I think from a category standpoint, I think it's been pretty steady year over year as far as our mix of where the GMV is coming from, but I would say that we are starting to see some greater mix coming through the E-Com channel we talked about Wayfair and actually.com. So we've seen a greater mix of E-Com, which tends for us to be heavier on the furniture side. So when you look at the categories, I would say there's softer demand on furniture in some of those household categories that we've talked about, but for us, we're offsetting that with some of the productivity gains and some of the emerging gains that we've talked about.

Fahmi: Morning, Brad. This is Fahmi. Yeah, I think from a category standpoint, I think it's been pretty steady year over year as far as, you know, kind of our mix of where the GMV is coming from, but I would say that we are starting

Speaker Change: to see a greater mix coming through the e-com channel. We've talked about Wayfair and actually.com. So we've seen a greater mix of e-com, which tends for us to be heavier on the furniture side.

Fahmi Karam: So when you look at the categories, I would say there's softer demand for furniture and some of those, you know, household goals categories that we've talked about. But for us, we're offsetting that with some of the productivity gains and some of the merging gains that we've talked about. So even though furniture may have some softer demand, and applications on a per location basis may be down, what we're seeing is that 35% increase because of some of the things that we've talked about.

Speaker Change: When you look at the categories, I would say there's softer demand on furniture and some of those household goals categories that we've talked about.

Fahmi: But for us, we're offsetting that with some of the productivity gains and some of the merging gains that we've talked about. So even though furniture may have some softer demand and applications.

Fahmi Karam: So even though furniture may have some softer demand and applications on a per location basis may be down. What we're seeing is that a 35% increase because of some of the things that we've talked about. So the mix is changing a little bit as far as whether brick-and-mortar versus e-com. I would say auto and jewelry also very strong. When we look year over year from a growth in applications and a growth in GMV standpoint. So it's pretty much the growth is coming across the board. We also talked about average ticket size; average ticket size has come down.

Fahmi: on a per location basis may be down. What we're seeing is that 35% increase because of some of the things that we've talked about. So, the mix is changing a little bit as far as whether brick and mortar versus e-comm. I would say auto and jewelry also very strong. We look year over year from a growth in applications and a growth in GMV.

Fahmi Karam: So the mix is changing a little bit as far as brick and mortar versus e-comm. I would say auto and jewelry are also very strong when we look year over year from a growth in applications and a growth in GMV.

Fahmi: standpoint. So it's pretty much the growth is coming across the board. We also talked about average ticket size. Average ticket size has come down.

Fahmi Karam: That's also partly of mix. Typically, our average ticket size is lower on the E-Com side, but there are some pricing benefits that we're seeing across the board as well. So some of that is also underwriting as we look to tighten on the bottom. We do cut the average ticket size. So obviously the growth is coming across the board across all categories.

Fahmi: That's also partly of mix.

Fahmi: Typically, our average ticket size is lower on the e-comm.

Fahmi Karam: So it's pretty much growth is coming across the board. We also talked about average ticket size. Average ticket size has come down. That's also partly due to the mix.

Fahmi: But there are some, you know, some pricing benefits that we're seeing across the board as well. So some of that is also underwriting as we look to tighten on the bottom. We do cut the average ticket size. So I would say the growth is coming across the board across all categories. And when you add it up.

Mitch Fadel: Typically, our average ticket size is lower on the e-comm side, but there are some, you know, some pricing benefits that we're seeing across the board as well. So some of that is also underwriting. As we look to tighten on the bottom, we do cut the average ticket size. So I would say growth is coming across the board, across all categories. Yeah, when you add it up, it's well said, Tammy.

Mitch Fadel: Yeah, and when you add it up, well said family, but Brad, when you add it up, it can be less than intuitive, especially in the furniture business with a lot of people, public companies at least, and even private companies talking negative things or sales and things like that. But when you add growth and trade down together, we still have growth in furniture. A good example of the large furniture company that reported numbers this morning was slightly negative revenue, but we're up with that merchant. And is that trade down, is that because our product offering is the best product offering they have?

Fahmi: That's well said, Fahmi, but Brad, when you add it up...

Mitch Fadel: But Brad, when you add it up, it's, It can be, it can be, let's say less than intuitive, that especially in the furniture business, with the business, a lot of people, public companies, at least, and even private companies talking about negative same-source sales and things like that. But when you add growth and trade-down together, we still have growth in furniture. You know, a good example of the, you know, large furniture company that reported numbers this morning was slightly negative, slightly negative revenue, but we're up with that merchant. You know, and is that a trade-down, is that because our product offering is the best product offering they have? I don't know.

Fahmi: Yes.

Brad Thomas: It can be, let's say, less than intuitive, especially in the furniture business, with

Speaker Change: with the business, a lot of people, public companies at least, and even private companies talk in negative same-source sales and things like that, but

Speaker Change: When you add growth and trade down together...

Speaker Change: We still have growth in furniture. You know, a good example of the, you know, large furniture company that reported numbers this morning was slightly negative, slightly negative revenue, but we're up with that merchant. You know, and is that trade down? Is that because our product offering is...

Mitch Fadel: I don't know; it's probably a combination of all that, but we're up with that merchant. So we can be up with a merchant that's down in revenue, and then when you add 10% growth in merchants to that factor that I just mentioned, in other words, at growth and trade down together, that's how you can be going the opposite way of maybe what people think is happening in the furniture industry.

Mitch Fadel: It's probably a combination of all that, but we're up with that merchant. So we can be up with a merchant that's down in revenue, and then when you add 10% growth in merchants to that factor that I just mentioned, in other words, add growth and trade-down together, that's how you can be going the opposite way of maybe what people think is happening in the furniture industry. That's very helpful.

Speaker Change: is the best product offering they have. I don't know, it's probably a combination of all that, but we're up with that merchant. So we can be up with a merchant that's down in revenue, and then when you add 10% growth in merchants.

Fahmi: to that factor that I just mentioned, in other words, it had growth and trade-down together. That's how you can be going the opposite way of maybe what people think is happening in the furniture industry.

Brad Thomas: That's very helpful.

Mitch Fadel: Maybe to follow up a little bit on Bobby's question, I don't know that I'd say derailing, but a question that we get asked is sort of thinking about how different macro scenarios might impact you all. And so I guess the question that should be, you know, is you maybe look at a year and think about potentially bad tail opportunities in the economy. And if we get discretionary coming back, maybe, how do you think that affects you?

Mitch Fadel: Maybe to follow up a little bit on Bobbi's question, I don't know that I'd say derailing, but a question that we get asked is sort of thinking about how different macro scenarios might impact you all. And so I guess the question that should be, you know, is maybe look at a year and think about potentially KL opportunities on the economy and if we get discretionary really coming back, maybe how do you think that affects you and maybe vice versa, if we saw unemployment rise, you know, how do you think a bound group fare? Yeah, I think it's the resilience and the durability of the model.

Speaker Change: That's very helpful. Maybe to follow up a little bit on Bobby's question, I don't know that I'd say derailing, but a question that we get asked is...

Speaker Change: sort of thinking about how different macro scenarios might impact you all. And so I guess the question that should be, you know, is you maybe look at a year and think about potentially

Mitch Fadel: And maybe vice versa, if we saw unemployment rise, you know, how does Upbound Group fare? Yeah, I think it's the resilience in the durability of the model when if we get more [inaudible]. At one end of the spectrum, maybe as the economy improves, you can start adding back some of what Fahmi just referred to from an underwriting standpoint. You can add some more back to the bottom. Plus, you get longer retention, especially on the Renaissance side when people have more money, so it helps the portfolio. So you can drive there.

Speaker Change: tail opportunities on the economy and if we get discretionary really coming back maybe, how do you think that affects you? And maybe vice versa, if we saw unemployment rise, you know, how do you think Upbound Group fares?

Speaker Change: Yeah, I think it's the resilience and the durability of the model when, if we get more

Mitch Fadel: If we get more at one end of the spectrum, maybe the economy improves, you can start adding back some of what Fahmi just referred to from an underage standpoint, the bottom, you can add some more back to the bottom, plus you get longer retention, especially on the runner's side when people have more money, so it helps the portfolio, so you can drive there eventually, maybe you lose some of the trade down on the other end, but that's the resiliency, how it just goes back and forth like a swing a little bit, and you end up strong in any economic environment. But I will say that as things like demand for household furnishings come back, that overall I see that as very positive for a runner center and for a SEMA, or as people start moving again, interest rates come down and people start moving again, people buying starter homes usually selling a lot, especially at that starter home category, and of course those are the ones most affected by these mortgage rates. So as people, it's not just Home Depot and Lowe's, it'll start benefiting from people moving around again, it's also our industry with the household furnishings and even appliances. So I think there's just plenty of tailwinds to think about, and very few on the headwind side, because again, even when things get a whole lot better, we still perform just the not just us, but the industry will still perform because of the reasons I've already said, and if it gets a lot worse, to your point about an unemployment could skyrocket again, we've certainly been through those cycles, and we've done fine because you get even more trade down, so obviously we're pretty optimistic.

Speaker Change: At one end of the spectrum, maybe as the economy improves.

Speaker Change: You can start adding back some of what Fahmi just referred to from an underwriting standpoint, the bottom. You can add some more back to the bottom. Plus, you get longer retention, especially on the rent-a-center side, when people have more money, so it helps the portfolio.

Mitch Fadel: Eventually, maybe you'll lose some of the trade down on the other end, but that's the resilience, how it just goes back and forth like a swing a little bit, and you end up strong in any economic environment. But I will say that, as you know, things like demand for household furnishings are coming back, and overall, I see that as very positive for Rent-A-Center and for ACIMA. As people start moving again, interest rates come down, and people start moving again. You know, people buying starter homes usually still own a lot, especially in that starter home category. And, of course, those are the ones most affected by these mortgage rates.

Speaker Change: you'll drive there. Eventually, maybe you'll lose some of the trade down on the other end. But that's the resiliency how it just it just goes back and forth like a like a swing a little bit and you end up end up strong in any economic environment. But I will say that as as

Fahmi: You know things like

Fahmi: demand for household furnishings come back that overall I see that as very positive.

Fahmi: for Rent-A-Center and for ACIMA, whereas people start moving again, interest rates come down and people start moving again. You know, people buying starter homes usually still own a lot.

Fahmi: Especially, you know, at that starter home category, and of course those are the ones most affected by these mortgage rates. So as people, it's not just Home Depot and Lowe's that'll start benefiting from people moving around again. It's also, it's also our industry with the household furnishings and even appliances, so.

Mitch Fadel: So as people, it's not just Home Depot and Lowe's that'll start benefiting from people moving around again. It's also our industry with household furnishings and even appliances. I think there's plenty of tailwinds to think about, and very few on the headwind side, because again, when things get a whole lot better, we'll still perform, not just us, but the industry will still perform because of the reasons I've already said, and if it gets a lot worse... to your point about it, unemployment could skyrocket again. We've certainly been through those cycles, and we've done fine Sounds good!

Fahmi: I think there's, I think there's just...

Fahmi: plenty of tailwinds to think about and very few on the headwind side because again even as when things get a whole lot better we we've still performed just the

Fahmi: Not just us, but the industry will still perform because of the reasons I've already said and if it gets a lot worse...

Fahmi: to your point about it unemployment could skyrocket again we've certainly been through those cycles and and we've done fine because the you get even more trade down so

Fahmi: Obviously, we're pretty optimistic.

Mitch Fadel: Thanks so much, Mitch. Thanks, Brad.

Fahmi: Sounds good. Thanks so much, Mitch.

Operator: One moment for the next question.

Brad Thomas: Thanks so much, Mitch. Thanks, Fred. One moment for the next question. The next question comes from Derek Summers with Jeffreys. Your line is open. Hey, good morning, everyone.

Brad Thomas: Thanks, Brad.

Derek Sommers: The next question comes from Derek Salmer's with Jeffries; your line is open.

Speaker Change: The next question comes from Derek Summers with Jeffreys. Your line is open.

Derek Sommers: Hi, good morning, everyone. What's the typical GMB ramp time when you onboard with a new retail partner? The ramp time, it's full of the depends on the industry a little bit and how big they are. The bigger they are, it ramps up a little slower because they might put it in a few stores to start and make sure everything's working and so forth. If you've got a two-store chain, there may be very little ramp up. I mean, very little time. By the second month, you might be at your run rate, so I think it kind of depends, but it doesn't take a long time.

Derek Summers: What's the typical GMB ramp time when you are on board with a new retail partner? The ramp time, you know. Suppose it depends on the industry a little bit and how big they are. You know, the bigger they are, it ramps up a little slower because they might put it in a few stores to start and make sure everything's working and so forth. If you've got a two-store chain... And there may be very little ramp-up, I mean very little time; by the second month, you might be at your run rate, and Kent kind of depends, but it doesn't take a long time.

Derek Summers: Hi, good morning everyone. What's the typical GMB ramp time when you are on board with a new retail partner?

Speaker Change: a two-store chain.

Derek Summers: Let me just let me just say that it's a couple of months, even on the big ones; It's still only a couple of months to ramp up in staff versus unstaffed. The staff stores will ramp up faster than the unstaffed ones. That's right. Great, thankful, helpful color there.

Speaker Change: It kind of depends, but it doesn't take a long time, let me just say that. It's a couple of months, even on the big ones, it's still only a couple of months to ramp up. And staffed versus unstaffed, the staffed stores will ramp up faster than the unstaffed. That's right.

Mitch Fadel: Let me just say that. It's a couple of months; even on the big ones, it's still only a couple of months to ramp up. We're done staffed; the staff stores will ramp up faster than the undisputed. That's right, we're just entering.

Mitch Fadel: Thank you.

Mitch Fadel: Great, thankful, helpful color there. And then just one quick one on the rack store count.

Mitch Fadel: And then just one quick one on the rack store count. How should we think about store count moving forward? Was most of that kind of consolidation exercise concentrated in this quarter? And how do you think about same store sales trends moving forward? Yeah, good question. Yeah, I think it was concentrated in that quarter. We don't see it.

Speaker Change: Great, thankful, helpful color there. And then just one quick one on the rack store count. How should we think about store count moving forward with most that kind of consolidation exercise concentrated in this quarter and how do you think about same store sales trends moving forward?

Mitch Fadel: How should we think about the store count moving forward? Was most of that kind of consolidation exercise compensated in this quarter? And how do you think about the same store sales trends moving forward? Yeah, good question. Yeah, I think it was concentrated in that quarter. We don't see it. We don't see a lot more this year. Of course, we're always looking to optimize. We've open stores too. And so it all depends on the market. But no, we don't, we don't see that from an ongoing standpoint. You know, we had, we had, you know, through the pandemic over the summer, we didn't have any underperforming, so first.

Mitch Fadel: We don't see a lot more this year. Of course, we're always looking to optimize. We've opened stores, too. And so it all depends on the market. But no, we don't, we don't see that from an ongoing standpoint.

Mitch Fadel: You know, we had we had, You know, through the pandemic and with the stimulus money, we didn't have any underperforming stores. So as we looked at here, three years away from that, the majority of what we've closed and only have two or three percent of our stores, but the majority were underperforming. I'd also want to point out that the majority of those stores, almost all of them, were less than three miles from another Rent-a-Center. Up to, like, 90% of them were less than three miles from another Rent-a-Center. And they were underperforming.

Mitch Fadel: So, as we looked at here three years away from that, that in the majority of what we've closed is only a two or three percent of our stores. But the majority we're underperforming. I'd also want to point out that the majority of those stores, almost all of them, were less than three miles from another rent center. Um, um, like 90% of them were less than three miles from another rent center. So, and they were underperforming. So we're able to still serve those customers. You know, we run reports that the off steam Anthony and this team look at every week where we take the customers out those close stores when we put them into the next closest store.

Speaker Change: And there are underperforming so we're able to still serve those customers. We run reports that the ops team Anthony and his team look at every week, where we take the customers out of those closed stores when we put them in the next closest store we run the reports to see how what our retention level is for those customers.

Mitch Fadel: So we're able to still serve those customers. We run reports that the operations team, Anthony and his team, look at every week, where we take the customers out of those closed stores, and when we put them in the next closest store, we run the reports to see what our retention level is for those customers as we put them in different stores. And the report, I was just looking at it the other day, the weekly report, where And the stores in the report right now, because it goes back two years, the stores on the report right now that we've closed average seven months of closure.

Mitch Fadel: We run the reports. To see how what our retention level is, those customers, as we put them in different stores in the report, is just looking at it the other day, the weekly report where and the stores in the report right now, because it goes back two years, the stores on the report right now that we've closed average seven months of closure. And we're over 80% retention of those customers. So it's pretty high retention when you get rid of the over rate of a store and keep that level of customers even seven months later on, on average.

Speaker Change: As we put them in different sourcing to report just looking at it the other day.

Speaker Change: <unk> report.

Speaker Change: And the stores and therefore right now because it goes back two years the stores on the report right now that we've closed averaged seven months of closure.

Mitch Fadel: And we're over 80% retention rate of those customers. So it's pretty high retention when you get rid of the override of a store and keep that level of customers even seven months later on average. So, But the short answer to your question is going forward, we don't see a lot more of that. We're in positive territory for same-store sales. We see that continuing through the rest of the year, and we don't see anything bringing that back down to negative territory. So we can continue to expect that. It'll be in the low single digits.

Speaker Change: And we're over 80% retention of those customers. So it's a pretty high retention. When you can get rid of get rid of the old rate of a stored and keep that debt level of customers. Even seven months later on on average so.

Mitch Fadel: So, but the short answer to your question is going forward. We don't see a lot more that we're in positive territory seems ourselves. We see that continuing through the through the rest of the year. We don't see anything bringing that bringing that back down to negative territory. So we can continue to expect that will be low single digits. You know, it's not we're not going to start putting the seeming numbers on the board at random center. But I think it's still be low single digits. Same sort of sales growth as we move forward. Great. Thanks for that.

Speaker Change: But the short answer to your question is going forward, we don't see a lot more that we're in positive territory same store sales, we see that continuing through the through the rest of the year, we don't see anything bringing that bringing that back down to negative territory.

Speaker Change: So we can continue to expect that would be low single digits. It's not we're not going to start putting the sema numbers on the board of rent a center, but I think.

Derek Summers: We're not going to start putting the SEMA numbers on the board if we're in the center, but I think it'll still be low single-digit same-store sales growth as we move forward. Great, thanks for that. That's all for me.

Speaker Change: It's still a low single digit same store sales growth as we move forward.

Speaker Change: Great Thanks for that thoughtful.

Derek Sommers: It's all for me. Thanks, Derek.

Speaker Change: Okay.

Operator: Thanks, sir. One moment for the next question. The next question comes from John Rowan with Jannie Modgunry-Scott. Your line is now open.

Derek Summers: Thanks Derek.

Operator: One moment for the next question.

Speaker Change: One moment for the next question.

Speaker Change: Yeah.

John Rowan: The next question comes from John Rowan with Janie Modgunri Scott.

Speaker Change: The next question comes from John Rowan with Janney Montgomery Scott. Your line is now open.

John Rowan: Your line is now open. Hey guys.

John Rowan: Hey, guys, good morning. So obviously, you can see the trade down pretty clearly in the Acima business with the applications coming, you know, down from a waterfall. But are you seeing the same type of trade-down benefit in the core rack business that you're seeing from, you know, whatever it might be people tightening up above you because of, you know, impending or recently enacted credit card regulations? Yeah, good question, John. It's certainly not as direct at Rentner Center, right? You can't; you don't really see it.

John Rowan: Hey, guys good morning.

Mitch Fadel: Good morning. So obviously you can see the trade down pretty clearly in the seem of business with the applications coming down from the waterfall. But are you seeing the same type of trade-down benefit in the core rack business that you're seeing from, you know, whatever might be people tightening up above you because of, you know, impending or recently enacted credit card regulations. Yeah, good question, John. It's certainly not a directive, right? You don't really see it. It takes a little longer because the customer's not in a waterfall at a retailer or online where they got denied, and then their next option would be at least.

Speaker Change: So obviously you can see the trade down pretty clearly and the CMO business.

John Rowan: What's the applications coming down from a waterfall, but are you seeing the same type of trade down benefit in the core <unk> business that youre seeing from whatever it might be people tightening up above you because of impending or.

John Rowan: Our recently enacted credit card regulations.

John Rowan: Yeah. Good question, John It's certainly not as directed <unk> you can't you don't really see it.

Mitch Fadel: It takes a little longer because the customer's not in a, in a, waterfall at a retailer or online where they get denied, and then their next option would be a lease. So it takes longer. Yeah, I'd say positive same-source sales will tell us we're seeing a little. Certainly, the Vantage scores don't have the increase like we're seeing at Acima, things like that. But I think that we're seeing a little bit; it's just a lot slower happening.

Speaker Change: It takes a little longer because the customers not any any any.

John Rowan: Waterfall at a retailer or online where they got denied and then the next option would be at least.

Mitch Fadel: So it takes longer. It's not like at a retail partner the way it seems it does. But I mentioned it earlier, too, John. I think there's some opportunities. There's some store closures out there where Renaissance and there in our neighborhoods, some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks. We're in the same neighborhood. So we see that only as an opportunity. Thankfully, on the Athena side, we don't do business with one of those, too. So it's nothing but positive does. Okay.

John Rowan: So it takes longer.

John Rowan: Yeah, I see positive same store sales will tell us we're seeing a little.

John Rowan: Certainly the advantage scores don't have the increase like we're seeing it as a siem or things like that.

Mitch Fadel: And, you know, it probably picks up over time. We don't have it in our forecast that a lot of trade down would pick up on the Rentner Center side going forward, but it probably picks up, it just takes a little longer because it's not that direct sale, like at a retail partner, the way Acima does it. But I mentioned it earlier, too, John, I think there are some opportunities, there are some store closures out there where Rentner Center is, and they're in our neighborhoods, you know, some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks.

John Rowan: But I think we're seeing a little bit it's just a lot slower happening and it probably picks up over we don't have it in our forecast with a lot of trade downward pick up on the rent a center side going forward, but it probably picks up it just takes a little longer because it's not that direct sale like at a retail partner the way it seem it doesn't but I mentioned.

Jon: It earlier to Jon I think.

John Rowan: I think there's some opportunities or some store closures out there were rent a center's.

Speaker Change: And they are in our neighborhoods some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks.

Mitch Fadel: We're in the same neighborhood, so we see that only as an opportunity, and thankfully, on the ASEMA side, we don't do business with either one of those two, so it's nothing but positive for us. Okay, now I'm going to ask one question about the CFPB, a broad question. If you can't answer it, I won't hold it against you, but I'm just trying to understand the main tenant of your lawsuit against them. I'm assuming, it's an assumption, that it's based on the legal definition of a lease in Dodd-Frank and whether or not the CFPB actually has jurisdiction over it.

Speaker Change: We're in the same neighborhood so.

Speaker Change: We see that only as an opportunity and thankfully on the <unk> side, we don't do business with either one of those two so it's nothing but positive does okay I'm going to ask one question on the CFPB a broad question. If you can't answer it I wont hold it against you, but I'm just trying to understand.

Mitch Fadel: I'm going to ask one question on the CFPV.

Mitch Fadel: Broad question; if you can't answer it, I won't hold it against you. But I'm just trying to understand the main tenant of your lawsuit against them. I'm assuming in some assumption that it's based on the legal definition of a lease in Dodd-Frank and whether or not the CFPV actually has jurisdiction over it. Is that correct?

Speaker Change: The main tenant of your lawsuit against them I'm assuming.

Speaker Change: Function that it's.

Speaker Change: Based on this.

Speaker Change: The legal definition of a lease in Dodd, Frank and whether or not the CFO. He actually has jurisdiction over it is that correct.

Mitch Fadel: Well, as I said in my prepared comments, and we see them trying to do it with Expander Authority, and you serve the state regulatory framework that governs our industry, and that's really just of it. All right. Thank you. Thanks, John.

Mitch Fadel: Is that correct? Well, as I said in my prepared comments, What we see them trying to do is expand their authority and usurp the state regulatory framework that governs our industry, and that's really just... Okay. All right.

Speaker Change: Well as I said in my prepared comments.

Speaker Change: We think there we see them trying to do is expand our authority in usurped the state regulatory framework the governance, our industry and that's that's really the gist of it okay alright. Thank you.

John Rowan: Thank you. Thanks, John. One moment for our next question. Also, as a reminder, to ask a question, you will just need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

John Rowan: Thanks, John.

Operator: One moment for our next question. Also, as a reminder to ask a question, you will just need to press star 11 on your telephone and wait for your need to be announced. To withdraw your question, please press star 11 again.

Speaker Change: One moment for our next question.

Speaker Change: Also as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Carla Cusella: The next question comes from the line of Carla Cusella for the JP Morgan. Your line is open.

Operator: The next question comes from the line of Carla Cusela. For JP Morgan, your line is open. Hi, thank you.

Speaker Change: The next question comes from the line of.

Carla Castella: Carla Castella.

Speaker Change: With Jpmorgan your line is open.

Carla Cusella: Hi, thank you. You talked about the store closures, and it sounds like you're getting good transfer retention to your other stores. Have you given the number of how many more you see opportunities to close, and if there's any specific regions where they're concentrated?

Carla Cusela: You talked about the store closures, and it sounds like you're getting good transfer retention to your other stores. Have you given a number of how many more you see opportunities to close and if there's any specific kind of regions where they're concentrated? No, Carla, we haven't. We don't really see any more this year, now, whether it be one or two sprinkled in, of course.

Carla Castella: Hi, Thank you.

Carla Castella: You talked about the store closures and it sounds like Youre getting good transfer retention to your other stores have you given the number of how many more you see opportunities to close and if there's any specific.

James: James where they're concentrated.

Mitch Fadel: No, Carla, we haven't. We don't really see any more this year. Now, whether it be one or two sprinkled in, of course. I mean, we lose leases and markets change and so forth, and we open a few sources here and there as we see the opportunity as well. So no, we haven't given that number, but as I mentioned, we don't really see any more on the near horizon.

Speaker Change: No. We haven't we don't we don't really see.

James: Any more this year now whether it be one or two sprinkled in of course, I mean, we lose leases and markets change and so forth.

Mitch Fadel: I mean, we lose leases and markets change and so forth, and we open a few stores here and there as we see the opportunity as well. So, no, we haven't given that number away, but as I mentioned, we don't see any more on the near horizon. Anyway, that was like we did a review of just about every store in the system or, certainly, every underperforming store in the system. And also, to answer your question, no, it wasn't regional. It was where we had an underperforming store and another store within three miles or less than three miles, the vast majority. But no, there wasn't any one region of the country or anything like that.

Speaker Change: And we open we opened a few stores here and there as we see the opportunity as well. So so no we haven't given that number but as I mentioned, we don't really see any we don't see any more on the on the near Horizon Anyhow that was like a we did a review of just about every store in the system or certainly every underperforming store in our system.

Mitch Fadel: Anyhow, that was like we did a review of just about every store in the system or certainly every underperforming store in the system. And also to answer your question, no, it wasn't regional. It was where we had an underperforming store and another store within three miles or less than three miles of the vast majority. So, but now there wasn't any one regional country or anything like that.

Speaker Change: <unk>.

Speaker Change: Also to answer your question no it wasn't regional.

Speaker Change: It was where we had an underperforming store in.

Speaker Change: And.

Speaker Change: Another store within three miles or less than three miles up the vast majority so but no there wasn't any one region of the country or or anything like that.

Carla Cusella: Okay, great. And then, you talked about de-leveraging from both, you know, cash flow as well as paying down debt. It looks like you're really the only debt payable right now is the AVL. Can you just talk about it? Are you thinking about something more broadly than that, or maybe AVL and eventually address them of the term loan as you, with your free cash flow?

Mitch Fadel: Okay, great. And then you talked about deleveraging from both, you know, EBITDA or cash flow as well as paying down debt. It looks like you're really the only debt payable right now is the ABL. Can you just talk about it? Are you thinking about something more broadly than that or maybe ABL and eventually address some of the term loans with your free cash flow? Yeah, hey, Carla, it's Fahmi.

Speaker Change: Okay, Great and then you talked about deleveraging from.

Speaker Change: Yes.

Speaker Change: Both.

Speaker Change: EBITDA and cash flow as well as paying down debt.

Speaker Change: It looks like you.

Speaker Change: Really the only debt payable right now is the ABL can you just talk about how you're thinking about something more broadly than that or E.

Speaker Change: Hey, Bill and eventually address some of the term loan with your free cash flow.

Fahmi Karam: Yeah, hey, Carla, it's family. Yeah, we have about 80 million outstanding on the AVL, but I think the de-leveraging comment is going to be a combination of, you know, paying down the AVL. We can also prepay the term loan, depending on where our cash flow is, but it'll be a combination of EBITDA growth as well as actually paying down some of the growth debt. Cash flow is obviously this year have been the free cash flow number. It's been light compared to year-over-year. We fund the GMV growth at a FEMA and fund some of the technology advancements that Mitch mentioned, but we do see that as some of the growth changes throughout the rest of the year, we comp over some of the bigger numbers year-over-year.

Fahmi Karam: Yeah, we have about 80 million outstanding on the ABL, but I think the deleveraging comment would be more, it's going to be a combination of, you know, paying down the ABL, and we can also prepay the term loan, depending on where our cash flow is, but it'll be a combination of EBITDA growth, as well as actually paying down some of that gross debt. Cash flows, obviously, this year have been, the free cash flow number has been light compared to year over year, as we fund the GMV growth at Acima and fund some of the technology advancements that Mitch mentioned, but we do see that, as some of the growth changes throughout the rest of the year, as we compare some of the bigger numbers, year over year, we do expect free cash flow to increase in the second half of the year, and we guided Okay, great.

Bill: Yeah, Hey, Hey, Carlos.

Sandra: Sandra Yes, we have about $80 million outstanding on the ABL, but I think the deleveraging comment would be more it's going to be a combination of paying down. The ABL. We can also prepay the term loan depending on where our cash flow is but it'll be a combination of of EBITDA growth as well as actually paying down some of that some of some of them.

Carla Cusela: That's helpful. Thank you. I am asking no further questions at this time.

Sandra: Our gross debt.

Speaker Change: Cash flows obviously this year have been the free cash flow number has been light compared to year over year as we fund the GMB growth at Sema and fund some of the technology advancements that Mitch Mitch mentioned, but we do see that as some of the growth changes throughout the rest of the year as we comp over some of the bigger numbers.

Speaker Change: Year over year, we do expect free cash flow to increase in the second half of the year and we guided for the third quarter of $60 million to $75 million and part of that will go down to paying down debt.

Fahmi Karam: We do expect free cash flow to increase in the second half of the year, and we guide it for the third quarter of 60 to 75 million, and part of that will go down to paying down debt.

Carla Cusella: Okay, great, helpful. Thank you.

Speaker Change: Okay, Great. That's helpful. Thank you.

Sandra: Yeah.

Operator: I am showing no further questions at this time.

Sandra: I am showing no further questions at this time I would now like to turn it back to our Chief Executive Officer, Mitch Fadel for closing remarks.

Operator: I would now like to turn it back to our Chief Executive Officer, Mitch Fadel, for closing remarks. Thank you, Elizabeth, and thank you to everyone who joined us today for an update on our second quarter and our outlook for the rest of the year. I'm really thankful for the collective efforts of my teammates and our merchants who helped deliver such strong GMV and the same sort of sales results for the quarter. We're grateful for your interest and your support, and we look forward to updating you next quarter on our continued progress towards the goals we've outlined. So, have a great day, everybody.

Mitch Fadel: I would now like to turn it back to our Chief Executive Officer, Mitch Fidel, for closing remarks. Thank you, Elizabeth, and thank you to everyone who joined us today for an update on our second quarter and our outlook for the rest of the year. I'm really thankful for the collective efforts of my teammates and our merchants who helped deliver such strong GMV and the same sort of sales results for the quarter, and we're grateful for your interest and your support. We look forward to updating you next quarter on our continued progress towards the goals we've outlined.

Mitch Fadel: Thank you Elizabeth and thank you to everyone, who joined US today for an update on our second quarter and our outlook for the rest of the year I'm I'm really thankful for the collective efforts of my teammates and our merchants, who helped deliver such strong <unk> in the same store sales results for the quarter and we're grateful for your interest and your support and we look forward to updating you.

Mitch Fadel: Quarter on our continued progress towards.

Mitch Fadel: The goals, we've outlined so have a great day everybody. Thank you.

Mitch Fadel: So have a great day, everybody. Thank you.

Operator: Thank you for joining the participation in today's conference.

Mitch Fadel: Thank you. Thank you for joining the participation in today's conference. This does conclude the program. You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day.

Speaker Change: Thank you for joining the participation in today's conference. This does conclude the program you may now disconnect.

Operator: This does include the program. You may now disconnect. Thank you.

Mitch Fadel: [music].

Sandra: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

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Speaker Change: [music].

Speaker Change: [music].

Speaker Change: [music].

Operator: Thank you for standing by. Welcome to the Unbound Group, Inc. Earnings Conference Call. At this time, all participants are in listen-only mode.

Operator: Thank you for standing by.

Speaker Change: Good day, Thank you for standing by welcome to the Q2 'twenty eight 'twenty four Unbound Group, Inc. Earnings Conference call. At this time, all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during.

Jeff Chesnut: Welcome to the Q2 2021-24 Unbound Group Inc. Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session to ask a question during the session. You will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.

Jeff Chesnut: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your question has been submitted. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Jeff Chesnut, Head of IR. Please go ahead.

Speaker Change: Session, you will need to press star one one on your telephone you will then hear an automated message advising that your hand is raised to withdraw. Your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today.

Operator: Please be advised that today's conference is being recorded.

Jeff Chesnut: I would now like to hand the conference over to your first speaker today. Jeff Chesnut, Head of IR, please go ahead.

Speaker Change: <unk>.

Speaker Change: Jeff Chesnut head of IR. Please go ahead.

Mitch Fadel: Good morning, and thank you all for joining us to discuss the company's performance for the second quarter of 2024. We issued our earnings release this morning. Before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at investor.bound.com.

Jeff Chesnut: Good morning, and thank you all for joining us to discuss the company's performance for the second quarter of 2024. We issued our earnings release this morning before the market opened, and the release and all related materials, including a link to the live webcast, are available on our website at www.investor.upbound.com.

Jeff Chesnut: Good morning, and thank you all for joining us to discuss the Companys performance for the second quarter of 2024, we issued our earnings release this morning.

Speaker Change: Before the market opened in a release and all related materials, including a link to the live webcast are available on our website at Investor day about the Dot com.

Mitch Fadel: On the call today from Upbound Group, we have Mitch Fadell, our CEO, and Family Cut him, our CFO. As a reminder, some of the statements provided on this call are forward-looking in our subjective factors that could cause actual results to differ materially and adversely from our expectations. These factors are described in our earnings release as well as in the company's SEC filings. Upbound Group undertakes no obligations to publicly update or revise any forward-looking statements except as required by law.

Jeff Chesnut: On the call today from Upbound Group, we have Mitch Fadel, our CEO, and Fahmi Karam, our CFO. As a reminder, some of the statements provided on this call are forward-looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations. The key factors are described in our earnings release as well as in the company's SEC filing. Upbound Group undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.

Speaker Change: On the call today from our Bank group, we have Mr. <unk>, our CEO and family kind of our CFO as a reminder, some of the statements provided on this call are forward looking and are subject to factors that could cause actual results to differ materially and adversely from our expectations.

Jeff Chesnut: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website, for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures. Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. Please refer to our website for the only authorized website.

Speaker Change: These factors are described in our earnings release as well as in the company's SEC filings are bound group undertakes no obligation to publicly update or revise any forward looking statements except as required by law.

Mitch Fadel: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website for a description of the non-GAAP financial measures and the reconciliation to the most comparable GAAP financial measures.

Speaker Change: This call will also include references to non-GAAP financial measures. Please refer to today's earnings release, which can be found on our website for a description of the non-GAAP financial measures and the reconciliations to the most comparable GAAP financial measures.

Mitch Fadel: Finally, Upbound Group is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. Please refer to our website for the only authorized webcasts.

Mitch Fadel: Finally, a founder group is not responsible for and does not editor guarantee the accuracy of our earnings teleconference. Transcripts provided by third parties. Please refer to our website for the only authorized webcasts with that I will turn the call over to Mitch.

Mitch Fadel: With that, I'll turn the call over to Mitch. Thank you, Jeff, and good morning to everyone on the call today. I'll begin with a review of the key highlights from the second quarter, then I'll hand it off to Fahmi for a more detailed review of our financial results and our financial outlook. And after that, we'll take some questions.

Mitch Fadel: With that, I'll turn the call over to Mitch. Thank you, Jeff, and good morning everyone on the call today. I'll begin with a review of the key highlights from the second quarter, then I'll hand it off to FAMI for a more detailed review of our financial results and our financial outlook.

Mitch Fadel: Thank you, Jeff and good morning to everyone on the call today.

Mitch Fadel: I'll begin with a review of the key highlights from the second quarter, and then I'll hand, it off to family for a more detailed review of our financial results and our financial outlook and after that we'll take some questions.

Mitch Fadel: And after that, we'll take some questions. We're very pleased with the results from the quarter, which included revenues of nearly $1.1 billion, adjusted EBITDAV of approximately $125 million, and non-GAAP earnings per share of $1.4. Our concentrated focus on execution paid off with random centers revenue up nearly 2% against the prior year, and it seems as revenue up 19%. Consisting of prior quarters, these results were driven by a steady focus on performance at both segments. A SEMA continued its strong momentum with growth in merchant count, enhanced productivity of our existing merchants in a growing contribution from a SEMA's direct-to-consumer e-commerce channel.

Mitch Fadel: We are very pleased with the results from the quarter, which included revenues of nearly $1.1 billion, adjusted EBITDA of approximately $125 million, and non-GAAP earnings per share of $1.04. Our concentrated focus on execution paid off, with Ren and Sen's revenue up nearly 2% against the prior year, and Acima's revenue up 19%. Consistent with prior quarters, these results were driven by a steady focus on performance at both segments.

Speaker Change: We are very pleased with the results from the quarter, which included revenues of nearly $1 1 billion adjusted EBITDA of approximately $125 million and non-GAAP earnings per share of $1 <unk>.

Speaker Change: Our concentrated focus on execution paid off with Radnet centers revenue up nearly 2% against the prior year and a seamless revenue up 19%.

Mitch Fadel: Consistent with prior quarters. These results were driven by a steady focus on performance at both segments.

Mitch Fadel: ACIMA continued its strong momentum with growth in merchant count, enhanced productivity of our existing merchants, and a growing contribution from a seamless direct-to-consumer e-commerce. Our lease charge-offs were in line with our expectations, as Acima finished the quarter at 9.6%, and Renasant was slightly better than expected at 4.2%. We also delivered strong sequential improvement in CIMA's adjusted EBITDA margin to 14.7% compared to 11.6% in the first quarter, which we'll discuss in a little more detail later in the presentation.

Mitch Fadel: <unk> continued its strong momentum with growth in merchant count.

Mitch Fadel: Enhanced productivity of our existing merchants and a growing contribution from our seamless direct to consumer E Commerce channel.

Mitch Fadel: Our lease charge elsewhere, in line with our expectations, is a SEMA finished the quarter at 9.6%, and rent is slightly better than expected at 4.2%. We also delivered strong sequential improvement in the SEMA's adjusted EBITDAV margin to 14.7% compared to 11.6% in the first quarter, which we'll discuss in a little more detail later in the presentation. With these results, based on our current expectations for the balance of the year, we're raising the midpoint of our previous guidance for revenue, adjusted EBITDA, and non-GAAP diluted EPS.

Speaker Change: Our lease charge offs were in line with our expectations at the Sema finished the quarter at nine 6% and rents are slightly better than expected at four 2%.

Mitch Fadel: We also delivered strong sequential improvement in <unk> adjusted EBITDA margin to 14, 7% compared to 11, 6% in the first quarter, which we'll discuss a little more detail later in the presentation.

Mitch Fadel: With these results, and based on our current expectations for the balance of the year, we're raising the midpoint of our previous guidance for revenue, adjusted EBITDA, and non-GAAP diluted EPS. So before we review our second result, let's discuss some of the enterprise-wide themes we've seen across the past quarter. The economic backdrop for our business this quarter continues to evolve. Unemployment edged higher to the 4% area and is still low by historic standards.

Mitch Fadel: With these results and based on our current expectations for the balance of the year, we are raising the midpoint of our previous guidance for revenue adjusted EBITDA and non-GAAP diluted EPS.

Mitch Fadel: So before we review our second results, let's discuss some of the enterprise-wide themes we've seen across the past quarter. The economic backdrop for our businesses' quarter continues to evolve; unemployment is higher to the 4% area, and while still low by historic standards, it's up from the 54-year low of 3.4% in April of last year. We also monitor inflation levels, especially in categories like rent and food and fuel, and we're pleased to see June's headline CPI, which was the first negative month-over-month print in four years. That will be welcome news to our consumers since inflation can have a larger impact on lower-income households.

Speaker Change: So before we review our segment results, let's discuss some of the enterprise wide themes, we've seen across the past quarter.

Mitch Fadel: It's up from the 54-year low of 3.4% in April of last year. We also monitor inflation levels, especially in categories like rent and food and fuel. And we're pleased to see June's headline CPI, which was the first negative month-over-month increase in four years. That will be welcome news to our consumers, since inflation can have a larger impact on lower income households. Other factors like credit card debt and delinquencies, hard goods demand, BNPL balances, and election uncertainty mean that the lower-income consumer is confronting a blizzard of economic variables.

Speaker Change: The economic backdrop for our business this quarter continue to evolve.

Mitch Fadel: Unemployment edged higher to the 4% area and while still by still low by historic standards.

Speaker Change: It's up from the 54 year low of three 4% in April of last year.

Speaker Change: Also monitor inflation levels, especially in categories like rent and food and fuel and we're pleased to see June headline CPI, which was the first negative month over month, Brent in four years.

Speaker Change: That will be welcome news to our consumers since inflation can have a larger impact on lower income households.

Mitch Fadel: Other factors like credit card debt and delinquencies, hard goods demand, BNPL balances, and election uncertainty mean that the lower-income consumers are confronting a blizzard of economic variables. But that's nothing new for our consumers. They're being deliberate in their spending choices as they seek value and flexibility while working to stretch their incomes. So it's not surprising to see more reports of trade-down activity, especially when factoring in the ongoing uncertainty over the credit card late fee regulations. As the credit lenders above us in merchant waterfalls has implemented mitigating actions, we believe some have also further adjusted underwriting, which can then introduce new consumers to least on solutions.

Speaker Change: Other factors like credit card then in delinquencies hard goods demand be NPL balances and election uncertainty mean that lower income consumers confronting a blizzard of economic variables, but that's nothing new for our consumers.

Mitch Fadel: But that's nothing new for our consumers. They're being deliberate in their spending choices as they seek value and flexibility while working to stretch their income. So it's not surprising to see more reports of trade-down activity, especially when factoring in the ongoing uncertainty over the credit card late-fee regulation. As the credit lenders above us and merchant waterfalls have implemented mitigating actions, we believe some have also further adjusted underwriting, which can then introduce new consumers to lease-owned solutions.

Speaker Change: They are being deliberate and theyre spending choices as they seek value and flexibility we are working to stretch their incomes.

Speaker Change: So it's not surprising to see more reports of trade down activity, especially when factoring in the ongoing uncertainty over the credit card late fee regulations.

Speaker Change: As the credit lenders above us and merchant waterfalls that implemented mitigating actions. We believe some of them also further adjusted underwriting, which can then introduce new consumers to the lease to own solutions.

Mitch Fadel: Although the read through isn't exact, we're seeing recent trends of more applicants and higher scoring applicants on average, especially in our SEMA segment. Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this dynamic environment to achieve reasonable risk levels, while continuing to focus on sustainable and profitable earnings growth. As this particular economic cycle evolves, we believe our business will be well-positioned for continued success.

Mitch Fadel: Although the read-through isn't exact, we are seeing recent trends of more applicants and higher-scoring applicants on average, especially in our SEMA segment. Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this dynamic environment to achieve reasonable risk levels, and we will continue to focus on sustainable and profitable earnings growth. As this particular economic cycle evolves, we believe our business will be well positioned for continued success. As someone who's been around this business for a long time, over four decades in the industry and with this company, I've seen all variations of cycles, and I know that our business and our value proposition are not only durable, but resilient.

Speaker Change: Although the the read through is an exact where we are seeing recent trends of more applicants and higher scoring applicants on average, especially in our CMS segment.

Speaker Change: Our data analytics team is constantly evaluating and adjusting our underwriting to adapt to this new to this dynamic environment to achieve reasonable risk levels, while continuing to focus on sustainable and profitable earnings growth.

Speaker Change: As this particular economic cycle evolves, we believe our business will be well positioned for continued success.

Mitch Fadel: As someone who's been around this business for a long time, over four decades in the industry and with this company, I've seen all variations of cycles. Tonight, I know that our business and our value proposition is not only durable, it's resilient. Our consumers appreciate the low, predictable payments that fit within their budget, and the flexibility to continue to renew their short-term leases to acquire ownership, to exercise and really purchase option and save, or just terminate the contract at any time without penalties, or even terminate and reinstate as their circumstances warrant. And we're truly on the channel with a differentiated model across both of our main segments that enables us to meet the customer where and when they're ready to shop.

Speaker Change: As someone who has been around this business for a long time over four decades in the industry and with this company I've seen all variations of cycles Tonight, and I know that our business and our value proposition is not only durable it's resilient.

Mitch Fadel: Our consumers appreciate the low predictable payments that fit within their budget and the flexibility to continue to renew their short-term leases to acquire ownership, to exercise an early purchase option and save, or just terminate the contract at any time without penalties, or even terminate and reinstate as their circumstances warrant. And we're truly omni-channel with a differentiated model across both of our main segments that enables us to meet the customer where and when they're ready to shop. Our online presence offers convenience and selection, while the in-store experience offers key values like seeing and testing out the products while building a relationship with our neighborhood-based store.

Speaker Change: Our consumers appreciate the low predictable payments that fit within their budget and the flexibility to continue to renew their short term leases to acquire ownership to exercise an early purchase option and save or just terminate the contract at any time without penalty or even terminated reinstate this or circumstances warrant.

Speaker Change: And we're truly omnichannel with a differentiated model across both of our main segments that enables us to meet the customer where and when they are ready to shop around.

Mitch Fadel: Our online presence offers convenience and selection, while the in-store experience offers key values like seeing and testing out the products. We're building a relationship with our neighborhood-based store teams. For our retail partners, we can deploy our staff model, which puts in a SEMA-leasing subject matter expert in their stores and can drive significant improvements in conversions. Supporting all of these channels and team members are our centralized support functions, where we optimize underwriting, account management, marketing, and operations across the company to minimize cost and maximize efficiency, while supporting our business units and delivering value to our retail partners and our customers.

Speaker Change: Our online presence offers convenience and selection while the in store experience offers key values like seeing in testing out the products. We're building a relationship with our neighborhood based store teams.

Mitch Fadel: For our retail partners, we can deploy our staff model, which puts a SEMA leasing subject matter expert in their stores and can drive significant improvements in conversion. Supporting all of these channels and team members are our centralized support functions, where we optimize underwriting, account management, marketing, and operations across the company to minimize cost and maximize efficiency, while supporting our business units and delivering value to our retail partners and our customers.

Speaker Change: For our retail partners, we can deploy our staff model, which puts in the sema leasing subject matter expert in their stores and can drive significant improvements in conversions.

Speaker Change: Supporting all of these channels and team members of our centralized support functions, where we optimize underwriting account management marketing and operations across the company and to minimize cost and maximize efficiency, while supporting our business units and delivering value to our retail partners and our customers.

Mitch Fadel: customers. Importantly, we have scale, both with our 2,000 plus branded stores and our 35,000 plus partner locations. And the business model has been built and tested for over 50 years now. And it's uncertain times like these scale and liquidity are critical to manage through the headwinds in position the company for long-term success as the environment improves. So the business is counterbalance with an algorithm that supports profitable returns across economic cycles. Leader macroeconomic cycles generally increase our business opportunities through trade-down. One more robust economies with healthy labor markets will generally see all cohorts performing better in generating lower losses.

Mitch Fadel: Importantly, we have scale, both with our 2000 plus branded stores and our 35,000 plus partner locations. The business model has been built and tested for over 50 years now, and in uncertain times like these, scale and liquidity are critical to manage through the headwinds and position the company for long-term success in the environment. So the business is counterbalanced, with an algorithm that supports profitable returns across economic sectors. Leaner macroeconomic cycles generally increase our business opportunities through trade down. Well, more robust economies with healthy labor markets will generally see all cohorts performing better in generating lower losses.

Speaker Change: Importantly, we have scale both of our 2000, plus branded stores and our 35000 plus partner locations and the business model has been built and tested for over 50 years now.

Speaker Change: Uncertain times like these scale and liquidity are critical to manage through the headwinds and position the company for long term success as the environment improves.

Speaker Change: So the business is counter balanced with an algorithm that support profitable returns across economic cycles.

Speaker Change: Leaner macroeconomic cycles generally increase our business opportunity through trade down.

Speaker Change: While more robust economies with healthy labor markets will generally see all cohorts performing better and generating lower losses.

Mitch Fadel: And that's how we delivered nearly 10% top line growth this period, with a consolidated loss rate that's in line with our expectations in geared optimized profitable returns.

Mitch Fadel: And that's how we deliver nearly 10% top-line growth this period with a consolidated loss rate that's in line with our expectations and geared to optimize profit. Now, let's walk through the details behind our segment financial results on slide four. Starting with the SEMA, we achieved our third consecutive quarter of GMV growth in the 20% range, with an improvement of 21% in this most recent quarter. Other than the stimulus period in 2021, we achieved a new record for the highest second quarter GMV that the CMIS has ever recorded.

Speaker Change: And Thats, how we delivered nearly 10% topline growth this period with a consolidated loss rate that's in line with our expectations and geared to optimize profitable returns.

Mitch Fadel: Now let's walk through the details behind our segment financial results on slide four. Starting with a FEMA, we achieved our third consecutive quarter of GMV growth in the 20% range, with improvement of 21% in this most recent quarter. Other than the stimulus period in 2021, we achieved a new record for the highest second quarter GMV they've seen as ever recorded. Similar to last quarter, this was powered by two primary factors. The addition of new merchant partners as well as the lift and productivity from our existing network of retailers, which means we're transacting more leases per location.

Speaker Change: Now, let's walk through the details behind our segment financial results on slide four.

Speaker Change: Starting with the Sema, we achieved our third consecutive quarter of GMB growth in the 20% range with an improvement of 21% in this most recent quarter.

Speaker Change: Other than the stimulus period in 2021, we achieved a new record for the highest second quarter <unk> ever recorded.

Mitch Fadel: Similar to last quarter, this was powered by two primary factors, the addition of new merchant partners, as well as a lift in productivity for our existing network of retailers, which means we're transacting more leases per location. In terms of new partners, the SEMA's business development team has signed up nearly 10% of net new merchant nameplates year over year. Now, while we do focus on enrolling new retail partners, we're equally committed to providing our current merchants with top-tier service tailored to their particular business and retail specialties. By collaborating with them on our marketing, we are able to more efficiently deliver, more effectively deliver the right message to consumers at the right time, like data-driven marketing campaigns or theme promotions, which provides a better experience for our customers and drives better outcomes for the retailers' top line.

Speaker Change: Similar to last quarter. This was powered by two primary factors. The addition of new merchant partners.

Speaker Change: As well as the lift in productivity from our existing network of retailers, which means we're transacting more leases per location.

Mitch Fadel: In terms of new partners, it seems as business development team has signed up nearly 10% net new merchant nameplates the year over year. Now what we do focus on and rolling new retail partners we're equally committed to providing our current merchants with top tier service tailored to their particular business and retail specialty. In fact, collaborating with them on our marketing initiatives, we're able to more efficiently deliver more effectively deliver the right message to consumers at the right time. Like data driven marketing campaigns are three theme promotions, which provides a better experience for our customers and drives better outcomes for the retailer's top line.

Speaker Change: In terms of new partners as seamless business development team had signed up nearly 10% net new merchant nameplates to year over year.

Speaker Change: Now, while we do focus on enrolling new oriented retail partners. We are equally committed to providing our current merchants with top tier service tailored to their particular business and retail specialty.

Speaker Change: We're collaborating with them on our marketing initiatives, we were able to more efficiently deliver more effectively deliver the right message to consumers at the right time.

Speaker Change: Data driven marketing campaigns are three theme promotions, which provides a better experience for our customers and drives better outcomes for the retailers topline.

Mitch Fadel: Our current merchants see the value in these efforts, which is wide active location count, with up nearly 10% against a year ago period. As a result, we saw a notable 35% lift in applications compared to last year when you add together the more merchants and more effective in within those merchants. 35% application growth over last year, but it's also important to remember that in the intervening year we deepen our relationships with two of our enterprise partners and WayFairNancially.com, and we'll start to camp their enhanced volume play to this year. I'm also pleased to share that Asima's direct-to-consumer offering continues to grow, with GMV from their funnel up over 50% as we add brand-name retailers to the site and continuously improve the shopping experience for our consumers.

Mitch Fadel: Our current merchants see the value in these efforts, which is why the active location count was up nearly 10% against a year ago. As a result, we saw a notable 35% lift in applications compared to last year.

Speaker Change: Our current merchant and see the value in these efforts, which is why active location count was up nearly 10% against the year ago period.

Speaker Change: As a result, we saw a notable 35% lift in applications compared to last year. When you add together the more merchants and more effective within those merchants, 35% application growth over last year, but it's also important to remember that in the intervening year, we deepened our relationships with two of our enterprise partners.

Mitch Fadel: When you add together the more merchants and the more effective within those merchants, 35% application growth over last year. But it's also important to remember that in the intervening year, we deepened our relationships with two of our enterprise partners, Wayfair and Ashley.com, and we'll start to count their enhanced volumes later this year. I'm also pleased to share that Acima's direct-to-consumer offering continues to grow, with GMV from that funnel up over 50% as we add brand-name retailers to the site and continuously improve the shopping experience for our consumers.

Speaker Change: Wafer nationally dot com and we will start to cap their enhanced volumes later this year.

Speaker Change: I'm also pleased to share that seamless direct to consumer offering continues to grow with DMV from that funnel up over 50% as we add brand name retailers to the site and continuously improve the shopping experience for our consumers.

Mitch Fadel: While most consumers first encounter a SEMA when shopping at a retail partner, either in store or online, our SEMA marketplace also enables customers to start their journey directly with us and we're shopping destinations like Ashley, Ikea, Amazon, and Best Buy. Our customers can quickly and easily find what they need and complete their lease on our site 24 hours a day, seven days a week, 365 days a year. of the year. Collectively, these are the efforts that resulted in Q2 revenues to be up 19% year-over-year. Similar to Q1, average ticket size was down a little bit, so the top line list was driven by the expanded penetration and the productivity that I've been talking about.

Mitch Fadel: While most consumers first encounter a SEMA when shopping at a retail partner, either in-store or online, our SEMA Marketplace also enables customers to start their journey directly with us, and with shopping destinations like Ashley, Ikea, Amazon, and Best Buy, our customers can quickly and easily find what they need and complete their lease on our site, 24 hours a day, seven days a week, 365 days a year.

Speaker Change: While most consumers first encounter a CMO in shopping at a retail partner either in store online or Sema marketplace also enables customers to start their journey directly with us and.

Speaker Change: And with shopping destinations like Ashley Ikea <unk>.

Speaker Change: Amazon and best buy our customers can quickly and easily find what they need and complete their lease on our site 24 hours a day seven days a week 365 days a year.

Mitch Fadel: Collectively, these are the efforts that resulted in Q2 revenues being up 19% year-over-year. Similar to Q1, average ticket size was down a little bit, so the top line lift was driven by the expanded penetration and the productivity that I've been talking about. Overall, the SEMA exited the second quarter with a funded lease count that was approximately 24% higher versus last year, as well as sequentially higher when compared to the first quarter of 2024. And from an underwriting standpoint, we continue to take a proactive and vigilant approach to risk management. Our SEMA segment loss rate was 9.6%, in line with our expectations, and flat sequentially the last quarter.

Speaker Change: Collectively these are the efforts that resulted in Q2 revenues to be up 19% year over year.

Speaker Change: Similar to Q1 average ticket size was down a little bit. So the topline lift was driven by the expanded penetration and the productivity that <unk> been talking about.

Mitch Fadel: Overall, it seemed to exit in the second quarter with a fund at least count those approximately 24% higher versus last year, as well sequentially higher when comparing it against the first quarter of 2024. From an underwriting standpoint, we continue to take a proactive and vigilant approach to risk management. Our SEMA segment loss rate was 9.6%, in line with our expectations and flat sequentially the last quarter. Despite the volume of applications increasing 35% year-over-year and the strong growth numbers we've been talking about, SEMA's approval rate declined 160 basis points from last year. In terms of delinquencies, SEMA's 60 plus fast due rate in the second quarter was down 80 basis points from a year, going down 90 basis points sequentially to the first quarter of this year.

Speaker Change: Overall, the sema exited the second quarter with a funded lease count those approximately 24% higher versus last year as well as sequentially higher when comparing it against the first quarter of 2024.

Speaker Change: And from an underwriting standpoint, we continue to take proactive and vigilant approach to risk management.

Speaker Change: Our CMS segment loss rate was nine 6% in line with our expectations and flat sequentially the last quarter.

Mitch Fadel: Despite the volume of applications increasing 35% year over year and the strong growth numbers we've been talking about, the seamless approval rate declined 160 basis points from last year. And in terms of delinquencies, the SEMA 60-plus past-due rate in the second quarter was down 80 basis points from a year ago and down 90 basis points sequentially from the first quarter. These results were in line with our expectations for the second quarter, and with the acceptance and now integration into Acima's decision engine nearly behind it, we remain very confident in our risk management outlook for the year.

Speaker Change: Despite the volume of applications, increasing 35% year over year and the strong growth numbers, we've been talking about as seamless approval rate declined 160 basis points from last year and in terms of delinquencies as seamless 60, plus pass due rate in the second quarter was down 80 basis points from a year ago down 90 basis.

Speaker Change: Sequentially to the first quarter of this year.

Mitch Fadel: The usual results were in line with our expectations for the second quarter and with the acceptance of integration into a SEMA's decision-engineerily behind us. We remained very confident in a risk management outlook for the year. As noted earlier, I'm pleased to share that our adjusted EBITOM margin in SEMA improved by 310 basis points to 14.7% in the second quarter as compared to the first quarter. As we've begun to experience some of the flow through we talked about with that higher GMV. The EBITOM margins from a year-go second quarter were a typically high and driven by the macro backdrop at that time.

Speaker Change: These results were in line with our expectations for the second quarter with the acceptance now integration into a seamless decision engine nearly behind US we remain very confident in our risk management outlook for the year.

Mitch Fadel: As noted earlier, I'm pleased to share that our adjusted EBITDA margin at ESIMA improved by 310 basis points to 14.7% in the second quarter as compared to the first quarter, as we've begun to experience some of the flow-through we talked about with that higher GMV. The EBITDA margins from a year ago in the second quarter were atypically high and driven by the macro backdrop at that time. So expecting the next couple of quarters of EBITDA margins to follow the current performance curve and land in this area is a statement to land in line with our expectations of low to mid-teens for the second quarter.

Speaker Change: As noted earlier I am pleased to share that our adjusted EBITDA margin at Sema improved by 310 basis points to 14, 7% in the second quarter as compared to the first quarter as we've been begun.

Speaker Change: <unk> begun to experience some of the flow through we talked about with that higher DMV.

Speaker Change: The EBITDA margins from a year ago second quarter were a typically high and driven by the macro backdrop at that time. So we're expecting the next couple of quarters of EBITDA margins as a similar follow the current performance curve and land in this area, which is right in line with our expectations of low to mid teens for this segment.

Mitch Fadel: So, expecting the next couple of quarters of EBITOM margins is a SEMA to follow the current performance curve and land in this area, which is right in line with our expectations of low to mid teens for the segment. Our team at SEMA is committed to running a lean business that realizes the scale inherent in its virtual platform model. And I'm confident we can continue to deliver sustainable, profitable growth. Now, in Rennes Center, we finished the second quarter with a SEMA store lease portfolio that was up 140 basis points year over year. And that portfolio growth helped drive positive SEMA store sales growth of 2.6% as we carried forward the momentum from last quarter's positive SEMA store sales growth.

Mitch Fadel: Our team at Acima is committed to running a lean business that realizes the scale inherent in its virtual platform model, and I'm confident we can continue to deliver sustainable, profitable Now, in Rent-A-Center, we finished the second quarter with a same-store lease portfolio that was up 140 basis points year-over-year, and that portfolio growth helped drive positive same-store sales growth of 2.6% as we carried forward the momentum from last quarter's Renaissance web channel volume continues to perform, and it represented approximately 26% of revenue in the second quarter, which was consistent with the year-ago period.

Speaker Change: Our team and his team are committed to running a lean business. They realize the scale inherent in this virtual platform model and I'm confident we can continue to deliver sustainable profitable growth.

Speaker Change: Non Rad Center, we finished the second quarter with our same store lease portfolio that was up 140 basis points year over year in that portfolio growth helped drive positive same store sales growth of two 6% as we carried forward the momentum from last quarter's positive same store sales growth.

Mitch Fadel: Rennes Center's web channel volume continues to perform, and it represented approximately 26% of revenue in the second quarter, which was consistent with the year-go period. These elements helped deliver revenue growth of 1.9% year over year, which flowed through to gross profit with a similar lift. Operating expenses increased approximately 4% compared to last year due to a combination of elevated labor benefits costs, delivery costs, and store technology investments. We expect the labor benefits expenses to normalize in the back half of the year, especially with the store consolidation efforts. As past quarter, in our fleet management team, is actively working on operating strategies to optimize efficiency.

Speaker Change: <unk> Web channel volume continues to perform and it represented approximately 26% of revenue in the second quarter, which was consistent with the year ago period.

Mitch Fadel: These elements helped deliver revenue growth of 1.9% year over year, which flowed through to gross profit with a similar. Operating expenses increased approximately 4% compared to last year due to a combination of elevated labor benefits costs, delivery costs, and store technology investments. We expect the labor benefits expenses to normalize in the back half of the year, especially with historic consolidation efforts this past quarter.

Speaker Change: These elements helped deliver revenue growth of one 9% year over year, which flowed through to gross profit with a similar lift.

Speaker Change: Operating expenses increased approximately 4% compared to last year due to a combination of elevated labor benefits cost delivery cost and store technology investments.

Speaker Change: We expect the labor benefits expenses to normalize in the back half of the year, especially with the store consolidation efforts this past quarter and our fleet management team is actively working on operating strategies to to optimize efficiency.

Mitch Fadel: And our fleet management team is actively working on operating strategies to optimize. Our continued emphasis on underwriting and account management at Reno's Center resulted in a lease charge outbreak of 4.2% for the quarter, down 30 basis points from the second quarter of last year. Our past due rate, which is an early indicator of potential future lease charge-offs, was stable at 2.7% for the quarter, down 40 basis points sequentially.

Mitch Fadel: Our continued emphasis on underwriting and account management at Rennes Center resulted in a lease charge operator 4.2% for the quarter, down 30 basis points from the second quarter last year. Our past due rate, which is an early indicator of potential future lease charge, also stable at 2.7% for the quarter, down 40 basis points from the first quarter.

Speaker Change: Our continued emphasis on underwriting and account management readiness centre resulted in a lease charge off rate of four 2% for the quarter down 30 basis points from the second quarter of last year.

Speaker Change: Our past due rate, which is an early indicator of potential future lease charge offs were stable at two 7% for the quarter down 40 basis points sequentially.

Mitch Fadel: Ashley. Although the pace of inflation has recently abated, which will reduce the economic pressure on renters' customer base over time, our account management efforts will continue to be an important element of customer connectivity in the near-to-medium term to help us maintain our delinquency and charge us rates at our target reaches. Overall, we're very pleased with our operating financial results in a second order. Both segments successfully anticipated met our customers in merchant's expectations, enabling us to achieve that 21% GMV growth as a SEMA, while meeting that mid-teens EBITDA margin target along with the same source sales growth at Renaissance Center.

Mitch Fadel: Although the pace of inflation has recently abated, which will reduce the economic pressure on RentCenter's customer base over time, our account management efforts will continue to be an important element of customer connectivity in the near to mid to medium term to help us maintain our delinquency and charge-off rates at our current rates. Overall, we're very pleased with our operating and financial results in the second quarter. Both segments successfully met our customers' and merchants' expectations, enabling us to achieve that 21% GMV growth into SEMA while meeting that mid-teens EBITDA margin target, along with the same store sales growth at rent. These results, along with the momentum we've already seen in the early July results.

Speaker Change: Although the pace of inflation has recently abated, which will reduce the economic pressure on rents in our customer base over time, our account management efforts will continue to be an important element of customer connectivity in the near to mid to medium term to help us maintain our delinquency and charge offs rate at our current at our target ranges.

Speaker Change: Overall, we're very pleased with our operating and financial results in the second quarter, both segments successfully anticipated met our customers and merchants expectations enabled us to achieve that 21% GMB growth at the sema, while meeting that mid teens EBITDA margin target.

Speaker Change: Along with the same store sales growth at rent a center.

Mitch Fadel: These results, along with the momentum we've already seen in the early July results, give us confidence that we're tracking well towards achieving our updated and increased full-year targets.

Speaker Change: These results along with the amendment momentum we've we've already seen in the early July results.

Mitch Fadel: give us confidence that we're tracking well towards achieving our updated and increased full year target. So on slide five, let's review the status of the strategic priorities we outlined for the. At Afima, we believe we continue to grow our market share with a nearly 10% increase in merchant partners year-over-year, with additions such as Purple Mattress and iFit, whose family of brands includes NordicTrack and Profit. We also onboarded two of the top 50 furniture retailers in the U.S., Levin Furniture in Sloverland.

Speaker Change: Give us confidence that we're tracking well towards achieving our updated and increased full year targets.

Mitch Fadel: So on slide 5, let's review the status of the strategic priorities we outlined for the year. At a SEMA, we believe we continue to grow our market share with a nearly 10% increase in merchant partners year-over-year, with additions such as Purple Mattress and iFit, whose family brands includes Nordic Track and Proform. We also onboarded two of the top 50 financial retailers in the U.S.; Levin covered from the pandemic year of pull-forward. We believe our lineup of merchants in that vertical is poised to accelerate when it does. In fact, we now partner with six of the top 15 financial retailers in the U.S.

Speaker Change: So on slide five let's review the status of the strategic priorities, we outlined for the year.

Speaker Change: And at <unk>, We believe we continue to grow our market share with a nearly 10% increase in merchant partners year over year with additions such as purple mattress and <unk>, whose family of brands includes Nordic track and pro forma.

Speaker Change: We also on boarded two of the top 50 furniture retailers in the U S Levin furniture and slumberland furniture.

Mitch Fadel: Well, we haven't yet seen our lines category fully recover from the pandemic era, but we believe our lineup of merchandise for merchants in that vertical is 46 already wanted. In fact, we now partner with six of the top 15 furniture retailers in the U.S. And it's important to note that, in addition to maintaining a strong presence among the largest furniture retailers, our teams have the talent and technology to deliver superior service and outcomes to sizable And even as we add national and regional accounts, Acima's merchant network remains highly diverse.

Speaker Change: And while we haven't yet seen the hard lines category fully recover from the pandemic are a pull forward. We believe our lineup of merchandisers merchants in that vertical is poised to accelerate when it does.

Speaker Change: In fact, we now partnered with six of the top 15 furniture retailers in the U S and it's important to note that in addition to maintaining a strong presence among the largest furniture retailers.

Mitch Fadel: And it's important to note that, in addition to maintaining a strong presence among the largest financial retailers, our teams have the talent and technology to deliver superior service and outcomes to sizable partners in a number of retail categories. And even as we had national and regional accounts, the SEMA's merchant network remains well diversified. In the second quarter, our largest retail represented approximately 6% of total GMV, and the top five were collectively about 20%. We strongly believe that the diversification of our merchant-based and product categories will help provide a stable foundation of predictable and sustainable growth for the future.

Speaker Change: Our teams have the talent and technology to deliver superior service and outcomes to sizable partners and a number of retail categories.

Speaker Change: And even as we add national and regional accounts as seamless merchant network remains well diversified.

Mitch Fadel: In the second quarter, our largest retailer represented approximately 6% of total GMP, and the top five were collectively about 20%. We strongly believe that the diversification of our merchant base and product categories will help provide a stable foundation of predictable and sustainable growth for the future. So we continue to add national and regional players, but we also add smaller players to keep that and GRRRL.

Speaker Change: In the second quarter, our largest retailer represented approximately 6% of total DMV and the top five were collectively about 20%.

Speaker Change: We strongly believe that the diversification of our merchant base and product categories will help provide a stable foundation of predictable and sustainable growth for the future. So we continue to add national and regional players, but we also had the smaller players to keep that diversity and growth.

Mitch Fadel: So we continue to add national and regional players, but we also add the smaller players to keep that diversity and growth.

Mitch Fadel: One of our recent operational priorities is the migration of the Acceptance Now staff business from the legacy underwriting platform over to a SEMA's Decision Edge. I am pleased to report that Veteran is nearly done with only a few stores in Puerto Rico remaining. As we wrap up our conversion, I'd like to speak to the benefits of the initiative. For retailers, we can embed SEMA team members on-site at certain high-volume locations to supplement the merchants' in-house team. Our representatives can serve as the leasing coordinator to help customers complete an LCO transaction in between transactions that can reinforce the training we provide to the retailer staff about a SEMA's leasing process.

Mitch Fadel: One of our recent operational priorities has been the migration of the Acceptance Now staff business from the legacy underwriting platform over to a seamless decision. And please report that that journey is nearly done, with only a few stores in Puerto Rico remaining. As we wrap up our conversion, I'd like to speak to the benefits of the initial. For our retailers, we can embed Acima team members at certain high-volume locations to supplement the merchant's in-house team. Our representatives can serve as the leasing coordinator to help customers complete an LCO transaction, and in between transactions, they can reinforce the training we provide to the retailer's staff about a SEMAS leasing program.

Speaker Change: One of our recent operational priorities has been the migration of the acceptance now staffed business from the legacy underwriting platform over to a seamless decision engine.

Speaker Change: I'm pleased to report that that journey is nearly done with only a few stores in Puerto Rico remaining.

Speaker Change: As we wrap up our conversion I would like to speak to the benefits of the initiative.

Speaker Change: For our retailers, we can embed as sema team members on site at certain high volume locations to supplement the merchants in house team.

Speaker Change: Our representatives can serve as the leasing coordinator to help customers complete the <unk> transaction in between transactions that can reinforce the training we provide to the retailer staff about the seamless leasing process.

Mitch Fadel: At hundreds of locations across the country, our team can drive nearly double the conversion rate of an on-site store, while allowing the retailer to redeploy resources more efficiently. Lee. In terms of underwriting, the consumer experience, the shift is a really important milestone for a female. The legacy platform was not designed for virtual account transactions. Given the seamless fully virtual model, the decision engine was designed from the beginning, and the digital orders should deliver stronger lease outcomes with lower losses. From a customer experience standpoint, the Asimil platform allows our customers the flexibility and fully check out online, without speaking to one of our representatives or physically going into the retail store like they had to do it exceptance now.

Mitch Fadel: At hundreds of locations across the country, our team can drive nearly double the conversion rate of a non-staff store while allowing the retailer to redeploy resources more efficiently. In terms of underwriting in the consumer experience, a shift is a really important milestone for a CMA. The legacy platform was not designed for virtual account transactions.

Speaker Change: At hundreds of locations across the country. Our team can drive nearly double the conversion rate of announced their store will allow the retailer to redeploy resources more efficiently.

Speaker Change: In terms of underwriting and the consumer experience a shift is a really important milestone for our steamer.

Speaker Change: Legacy platform was not designed for virtual account transactions.

Mitch Fadel: Given the seamless, fully virtual model, the decision engine was designed from the beginning to handle digital orders and should deliver stronger lease outcomes with lower losses. From a customer experience standpoint, the Acimo platform allows our customers the flexibility to fully check out online without speaking to one of our representatives or physically going into the retail store like they had to do at Acceptance Now. This should improve conversion and increase GMV at these locations because they can now best handle the whole spectrum of customer interaction.

Speaker Change: Given the seamless fully virtual model. The decision engine was designed from the beginning the end of digital orders and should deliver stronger lease outcomes with lower losses.

Speaker Change: From a customer experience standpoint, the athima platform allows our customers the flexibility to fully check out online without speaking to one of our representatives or physically going into the retail store like they had to do at acceptance now.

Mitch Fadel: This should improve conversion and increase GMV at these locations because now they can bet hand over the whole spectrum of customer interactions. We're excited about the opportunity to improve yields, increase GMV for those merchant partners, and supplement our staff business with a sophisticated underwriting platform.

Speaker Change: This should improve conversion and increased <unk> at these locations because now they can best handle the whole spectrum of customer interactions. We're excited about the opportunity to improve yields increase CMV for those merchant partners and supplement our staff business with our sophisticated underwriting platform.

Mitch Fadel: We're excited about the opportunity to improve yields, increase GMV for those merchant partners, and supplement our staff business with a sophisticated underwriting platform. At Rent-A-Center, we've highlighted our continuing investments in technology, and in particular, in our digital channels to help us seamlessly serve our customers, whether it's in-store or online. And those investments are paying off with nearly 17 million visits to RenaissanceReina.com in the second quarter, which increased double digits against the year-ago quarter.

Mitch Fadel: A rennet center was highlighted. Our continuing investments in technology and, in particular, in our digital channels, to help us seamlessly serve our customers, whether it's in store or online. In those investments, our paying off with nearly 17 million visits to rennetcerned.com in the second quarter, which increased double digits against the year before quarter. Our web visits being up double digits reflects our team's efforts to drive online traffic and create a consistent, friction-free customer experience across each of our channels. More specifically, we've added new identity validation steps to exploit the online checkout process for customers while improving our ability to screen out fraudulent traffic.

Speaker Change: A rent a center we've highlighted our continuing investments in technology and in particular in our digital channels to help us seamlessly serve our customers, whether it's in store or online.

Speaker Change: And those investments are paying off with nearly 17 million visits to registering dot com in the second quarter, which increased double digits against the year ago quarter.

Mitch Fadel: Our web visits being up double digits reflects our team's efforts to drive online traffic and create a consistent, friction-free customer experience across each of our channels. More specifically, we've added new identity validation steps to expedite the online checkout process for customers while improving our ability to screen out fraudulent traffic.

Speaker Change: Our web business being up double digits reflects our team's efforts to drive online traffic and create a consistent friction free customer experience across each of our channels.

Speaker Change: More specifically, we've identified we've added new identity valid validation steps to expedite the online checkout process for customers, while improving our ability to screen out fraudulent traffic.

Mitch Fadel: As we see more of our customer interaction shifted digital channels, we have an opportunity to optimize our footprint, our store footprint, which has already closely managed based on key store level metrics we look at and what's going on in the local area and based on those variables. We consolidated 55 stores, or approximately 3% of our company on stores, during the first half of the year, most of which took place in the second quarter. We expect to maintain those relationships with the majority of customers by serving them as a nearby store or by engaging them online, and going forward, we'll keep working to strike the right balance to serve our customers efficiently across all our connection points while optimizing rennetcerned scale and productivity.

Mitch Fadel: As we see more of our customer interaction shift to digital channels, we have an opportunity to optimize our footprint, our store footprint, which is already closely managed, you know, based on key store level metrics we look at and what's going on in the local area. And based on those variables. We consolidated 55 stores, or approximately 3% of our company-owned stores, during the first half of the year, most of which took place in the second quarter.

Speaker Change: As we see more of our customer interaction shift to digital channels, we have an opportunity to optimize our footprint our store footprint, which is already closely manage.

Speaker Change: On key store level metrics, we look at and what's going on in the local area and based on those variables.

Speaker Change: We consolidated 55 stores or approximately 3% of our company owned stores during the first half of the year most of which took place in the second quarter.

Mitch Fadel: And we expect to maintain those relationships with the majority of customers by serving them at a nearby store or by engaging them online. And going forward, we'll keep working to strike the right balance to serve our customers efficiently across all our connection points, while optimizing Renaissance scale and productivity. At the Upbound level, we continue to test and learn in the consumer credit space through our partnership with Concura. We've made sequential progress each month since we launched the pilots in February for the Acima Classic Credit General Purpose MasterCard and the Acima Private Label Credit Cards, each of which expands our offerings as well as financial access for our customers.

Speaker Change: And we expect to maintain those relationships with the majority of customers by serving them in at a nearby store or by engaging them online and going forward, we will keep working to strike the right balance to serve our customers efficiently across all our connection points.

Speaker Change: Optimizing Renaissance scale and productivity.

Mitch Fadel: At the F on level, we continue to test and learn in the consumer credit space through our partnership with Concurra. We've made sequential progress each month since we launched the pilots in February for the Asima Classic Credit General Purpose Mastercard and the Asima Private Label Credit Card, each of which expands our offerings as well as financial access for our customers. In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners. Some of our current merchant partners are looking to streamline their vendor relationships, and our combined second looking LTO offering delivers increased opportunities to serve more consumers with our leading solutions.

Speaker Change: At the outbound level, we continue to test and learn in the consumer credit space through our partnership with concur with.

Speaker Change: We've made sequential progress each month since we launched the pilots in February for the Athima Classic credit General purpose, Mastercard and the Athima private label credit cards, each of which expands our offerings as well as financial access for our customers.

Mitch Fadel: In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners. Some of our current merchant partners are looking to streamline their vendor relationships, and our combined second look and LTO offering delivers increased opportunities to serve more consumers with our leading solution. We've also found that potential clients, especially those without an incumbent second look credit provider, appreciate the one-stop shop approach, especially when considering integration efforts for the POS.

Speaker Change: In particular, we've been pleased to see that the private label offering has resonated with our existing and prospective retail partners.

Speaker Change: Some of our current merchant partners are looking to streamline their vendor relationships and our combined second look in <unk> offering delivers increased opportunities to serve more consumers.

Speaker Change: With our leading solutions.

Mitch Fadel: We've also found that potential clients, especially those without an incumbent second look credit provider, appreciate the one snapshot approach, especially when considering integration effort for the POS systems. As a reminder, we structured our existing partnership with the Concurra, so we're not taking any credit risk, and our economics are driven by upfront fees and revenue to share. Engineering.

Speaker Change: We've also found that potential clients, especially those without an incumbent second look credit provider. Appreciate the one stop shop approach, especially when considering integration effort for their Pos systems.

Mitch Fadel: As a reminder, we structured our existing partnership with Concurra so we're not taking any credit risk, and our economics are driven by upfront fees and revenue sharing. Also, at the Upbound level, we continue to make significant investments in digital technology to support our business. Our strategic initiatives on the connected enterprise are on target to supercharge our omni-channel strategy within Renison and across the organization. The recent launch of RackPad, our next generation cloud native POS, sets the direction towards an integrated customer experience across all. Its microservices architecture promotes swift development of features and product integration, prioritizing customer experience and boosting coworker efficiency with user-friendly work.

Speaker Change: As a reminder, we structured our existing partnership with concur. So we're not taking any credit risk in our economics are driven by upfront fees and revenue sharing.

Mitch Fadel: Also at the Upbound level, we continue to make significant investments in digital technology to support our business. Our strategic initiatives on the connected enterprise are on target to supercharge our omnichannel strategy within Renaissance Center and across the organization. The recent launch of RACPAD, our next generation cloud native POS system, sets the direction towards an integrated customer experience across all channels. It's microservices architecture promotes swift development of features in product integration, prioritizing customer experience and boosting co-worker efficiency with user friendly workflows. Our online traffic continues to show double-digit growth, and to support this increased demand, we're introducing a new e-commerce platform based on a modular architecture that will allow our brands to adopt, deploy, and scale an omnichannel sales approach focused on increased conversion and retention rates.

Speaker Change: Also with the outbound level, we continue to make significant investments in digital technology to support our business our.

Speaker Change: Our strategic initiatives on the connected enterprise.

Speaker Change: We are on target to supercharge, our omnichannel strategy within rent a center and across the organization.

Speaker Change: The recent launch of Rec bettered, our next generation cloud native Pos system sets a direction towards an integrated customer experience across all channels.

Speaker Change: It's micro services architecture promote Swift development of features and product integration prioritizing customer experience and boosting co worker efficiency with user friendly workflows.

Mitch Fadel: Our online traffic continues to show double-digit growth, and to support this increased demand, we're introducing a new e-commerce platform based on a modular architecture that will allow our brands to adopt, deploy, and scale a nominee channel sales approach focused on increased conversion and retention. As we reduce our data center footprint, both of these initiatives mark a significant milestone in improving the scalability of our operations. Reducing Technical Debt and bolstering our cyber resiliency, which are key components to support our growth.

Speaker Change: Our online traffic continues to show double digit growth and to support this increased demand we are introducing a new E. Commerce platform based on a modular architecture that will allow our brands to adopt deploy and scale on omnichannel sales approach focused on increased conversion and retention rates.

Mitch Fadel: As we reduce our data center footprint, both of these initiatives mark a significant milestone of improving scalability of our operations, reducing technical debt, and bolstering our cyber resiliency, which are key components to support our growth.

Speaker Change: As we reduce our data center footprint both of these initiatives Mark a significant milestone of improving scalability of our operations, reducing technical debt and bolstering our cyber resiliency, which are key component components to support our growth.

Mitch Fadel: Overall, there's still plenty of uncertainty in the market, whether it's where the economy has added consumer sentiment, industry dynamics, or even the upcoming election. But we view that as an opportunity because our business is built to succeed across these cycles. We've already passionate about serving our current customers, and we expect new customers will discover our product offerings as trade-down continues. And when they do, we'll be ready as a trusted brand to help them get the products they need to live their lives, their daily lives, to the fullest.

Mitch Fadel: Overall, there's still plenty of uncertainty in the market, whether it's where the economy is headed, consumer sentiment, industry dynamics, or even the upcoming election. But we view that as an opportunity, because our business is built to succeed across these. We're already passionate about serving our current customers, and we expect new customers will discover our product offerings as trade down continues. And when they do, we'll be ready as a trusted brand to help them get the products they need to live their lives, their daily lives.

Speaker Change: Overall, there is still plenty of uncertainty in the market, whether it's where the economy is headed consumer sentiment industry dynamics or even the upcoming election, but.

Speaker Change: But we view that as an opportunity as our field business is built to succeed across these cycles.

Speaker Change: We're already passionate about serving our current customers and we expect new customers will discover our product offerings as trade down continues and when they do we'll be ready as a trusted brand to help them get the products they need to live their lives their daily lives to the fullest.

Mitch Fadel: Now, before I hand it off to Fahmi, I'd like to briefly address the lawsuit that SEMA Leasing filed against the CFPB last year. We brought this action in Texas federal court seeking to halt what we contend is the CFPB's unauthorized attempt to expand its authority, which is limited by federal law, and usurp the long-standing comprehensive state regulatory framework governing our industry and governing the lease owners. As you know, we previously disclosed that the CFPB has been conducting an investigation of SEMA that began prior to Upbound's acquisition of the company in 2021.

Mitch Fadel: Now, before I hand it off to family, I'd like to briefly address the lawsuit, the SEMA leasing filed against the CFPV last week. We brought this action in Texas federal court seeking to halt what we intend is the CFPV's unauthorized attempt to expand its authority, which is limited by federal law. And you served the longstanding comprehensive state regulatory framework governing our industry, governing the lease-dome industry. As you know, we previously disclosed that the CFPV has been conducting an investigation of a SEMA that began prior to a bond's acquisition of the company in 2021. After this protracted investigation, the CFPV threatened an imminent enforcement action against the SEMA.

Speaker Change: Now before I hand, it off to family I'd like to briefly address the lawsuit as sema leasing filed against the CFPB last week.

Speaker Change: We process action in Texas Federal Court seeking to halt will we contend is the cfpb's unauthorized attempt to expand its authority, which is limited by federal law and usurped the longstanding comprehensive state regulatory framework governing our industry covering the lease own industry.

Speaker Change: As you know we previously disclosed that the CFPB has been conducting an investigation of the cement that began prior to a bounce acquisition of the company in 2021.

Mitch Fadel: After this protracted investigation, the CFPB threatened an imminent enforcement action against ACIMA. I want to make clear that ACIMA filed this lawsuit reluctantly. Despite our long-standing cooperation, we ultimately concluded that CFPB was not prepared to settle with ACIMA on acceptable terms.

Speaker Change: After this protracted investigation the CFPB threatened an imminent enforcement action against the Sema.

Mitch Fadel: Now, I want to make clear that the SEMA filed this lawsuit reluctantly. Despite our longstanding cooperation, we ultimately concluded that the CFPV was not prepared to settle with the SEMA unacceptable terms. Then, as expected, the CFPV subsequently initiated an enforcement action against the SEMA on July 26, alleging violations of various federal consumer financial protection statutes. We believe the CFPV is engaging in form shopping by finding a lawsuit in Utah after our lawsuit was already pending in Texas addressing the same subject matter. We strongly contest our claims and will vigorously defend ourselves against them.

Speaker Change: Now I want to make clear that the sema filed this lawsuit reluctantly.

Speaker Change: Despite our longstanding cooperation we ultimately concluded the CFPB was not prepared to settle with the <unk> terms.

Mitch Fadel: Then, as expected, the CFPB subsequently initiated an enforcement action against FEMA on July 26, alleging violations of various federal consumer financial protection statutes. We believe the CFPB is engaging in forum shopping by finding a loss in Utah after our lawsuit was already pending in Texas addressing the same subject. We strongly contest our claims and will vigorously defend ourselves against them. As you would expect, though, because of the pending litigation, we're not able to comment any further on this matter.

Speaker Change: Then as expected the CFPB subsequently initiated an enforcement action against the same on July 26, alleging the allegations are alleging violations of various federal consumer financial protection statutes.

Speaker Change: We believe the CFPB is engaging in form shopping by finding their loss in Utah. After our lawsuit was already pending in Texas addressing the same subject matter with.

Speaker Change: We strongly contest their claims and will vigorously defend ourselves against them.

Mitch Fadel: So, as you would expect, though, because of the pending litigation, we're not able to come in any further on this matter. So, as I ramp up my section, I'd like to thank my exceptional teammates across all the corners of our business for their energy, their enthusiasm, and their dedication. I know they're just as excited as I am about carrying them momentum from the first half of the year across the second half and beyond. where they're working on segment-specific projects or collaborating on enterprise-wide priorities.

Speaker Change: So as you would expect though because of the pending litigation, we're not able to comment any further on this matter. So as we as I wrap up my section I would like to thank my exceptional teammates across all corners of our business for their energy their enthusiasm and their dedication I know they are just as excited as I am about carrying the momentum from the first half of the year.

Mitch Fadel: So as I wrap up my section, I'd like to thank my exceptional teammates across all the corners of our business for their energy, their enthusiasm, and their dedication. I know they're just as excited as I am about carrying the momentum from the first half of the year across the second half and beyond. Whether working on segment-specific projects or collaborating on enterprise-wide priorities, our coworkers are the driving force that will help us deliver a strong finish to the year. And with that, I'll turn the call over to you.

Speaker Change: The second half and beyond.

Family: Whether working at segment specific projects are collaborating on enterprise wide priorities. Our coworkers are the driving force will help us deliver a strong finish to the year and with that I'll turn the call over to family.

Fahmi Karam: Our co-workers are the driving force that will help us deliver a strong finish to the year, and with that, I'll turn the call over to Famine.

Fahmi Karam: Thank you, Mitch, and good morning, everyone. I'll start today with a review of the second quarter results, and then discuss our outlook for the rest of the year, after which we will take questions. Beginning on page 6 of the presentation. Consolidated revenue for the second quarter was up 9.9% year-over-year, with the SEMA up 19% and Renner Center up 1.9%. Rentals and fees revenues were up 9.7%, while merchandise sales revenue increased 17.3%, reflecting a larger portfolio balance at a SEMA coming into the quarter. Consolidated growth margin was 49.4%, and decreased 230 basis points year-over-year, with a 190 basis point decrease in the SEMA segment and a 40 basis point decrease in the Renner Center segment.

Fahmi Karam: Thank you, Mitch, and good morning, everyone. I'll start today with a review of the second quarter results and then discuss our outlook for the rest of the year, after which we will take questions, beginning on page 6 of the presentation.

Family: Thank you Mitch and good morning, everyone.

Family: I'll start today with a review of the second quarter results and then discuss our outlook for the rest of the year after which we will take questions.

Family: Beginning on page six of the presentation.

Fahmi Karam: Consolidated revenue for the second quarter was up 9.9% year over year, with the SEMA up 19% and Rent-A-Center up 1.9%. Rentals and fees revenues were up 9.7%, while merchandise sales revenue increased 17.3%, reflecting a larger portfolio balance at Acima coming into the quarter. Consolidated gross margin was 49.4% and decreased 230 basis points year-over-year, with a 190 basis point decrease in the ASEMA segment and a 40 basis point decrease in the Rena Center segment.

Family: Consolidated revenue for the second quarter was up nine 9% year over year with the Sema up 19% and rent a center up one 9%.

Family: Rentals and fees revenues were up nine 7%, while merchandise sales revenue increased 17, 3%, reflecting a larger portfolio balance at sema coming into the quarter.

Family: Consolidated gross margin was 49, 4% and decreased 230 basis points year over year with 190 basis point decrease in the <unk> segment, and a 40 basis point decrease in the rent a center segment.

Fahmi Karam: Consolidated non-GAAP operating expenses, excluding lease charge-offs, and depreciation and amortization were up with single digits. Led by a low double-digit increase in non-labor operating expenses, including delivery costs at Renner Center, and a high single-digit increase in general and administrative costs, which was a result of targeted corporate investments in technology and people. The consolidated lease charge-off rate was 7.2%, a 30 basis point increase from the prior year period, and in line with our expectations. On a sequential basis, the consolidated lease charge-off rate decreased 20 basis points due to a 50 basis point sequential improvement at Renner Center.

Fahmi Karam: Consolidated non-GAAP operating expenses, excluding lease charge-offs and depreciation and amortization, were up mid-single digits, led by a low double-digit increase in non-labor operating expenses, including delivery costs at Rent-A-Center, and a high single-digit increase in general and administrative costs, which was a result of targeted corporate investments in technology and people. The consolidated lease charge-off rate was 7.2%, a 30 basis point increase from the prior year period and in line with our expectations.

Family: Consolidated non-GAAP operating expenses, excluding lease charge offs and depreciation and amortization were up mid single digits led by a low double digit increase in non labor operating expenses, including delivery costs at rent a center and a high single digit increase in general and administrative costs, which was.

Family: Which was a result of targeted corporate investments in technology and people.

Family: The consolidated lease charge off rate was seven 2%, a 30 basis point increase from the prior year period and in line with our expectations.

Family: On a sequential basis, the consolidated lease charge off rate decreased 20 basis points due to a 50 basis point sequential improvement at rent a center.

Fahmi Karam: On a sequential basis, the consolidated lease charge-off rate decreased 20 basis points due to a 50-basis-point sequential improvement at Renison. Consolidated Adjusted EBITDA of $124.5 million decreased 4.6% year-over-year with higher ESIMA segment adjusted EBITDA, offset by lower Rent-A-Center segment adjusted EBITDA, and higher corporate costs.

Fahmi Karam: Consolidated adjusted EBITDAB 124.5 million decreased 4.6% year-over-year, with higher SEMA segment adjusted EBITDA, offset by lower Renner Center segment adjusted EBITDA, and higher corporate costs. Adjusted EBITDAB margin of 11.6% was down approximately 170 basis points compared to the prior year period, with approximately 160 basis points contraction for Renner Center, and approximately 210 basis points of margin contraction for a SEMA, offset by a 20 basis point decrease in corporate costs as a percentage of sales. I'll provide more detail in the segment results in a moment. Looking below the line, second quarter net interest expense was approximately 28 million, which was roughly flat compared to the prior year period.

Family: Consolidated adjusted EBITDA of $124 5 million decreased four 6% year over year with higher <unk> segment, adjusted EBITDA offset by lower rent a center segment, adjusted EBITDA and higher corporate costs.

Fahmi Karam: Adjusted EBITDA margin of 11.6% was down approximately 170 basis points compared to the prior year period, with approximately 160 basis points of contraction for RendeCenter and approximately 210 basis points of margin contraction for Acima, offset by a 20 basis point decrease in corporate costs as a percentage of sales. I'll provide more detail on the segment results in a moment. Looking below the line, second quarter net interest expense was approximately $28 million, which is roughly flat compared to the prior year period. The effective tax rate on a non-GAAP basis was 25.8%, compared to 25.5% for the prior year period.

Family: Adjusted EBITDA margin of 11, 6% was down approximately 170 basis points compared to the prior year period with approximately 160 basis points of contraction for rent a center and approximately 210 basis points of margin contraction for FEMA.

Family: Offset by a 20 basis point decrease in corporate costs as a percentage of sales.

Family: I'll provide more detail on our segment results in a moment.

Family: Looking below the line second quarter net interest expense was approximately $28 million, which was roughly flat compared to the prior year period.

Fahmi Karam: The effective tax rate on a non-GAT basis was 25.8%, compared to 25.5% for the prior year period. The diluted average share count was 55.8 million shares in the quarter. GAT earnings per share was 61 cents in the second quarter compared to a loss per share of 83 cents in the prior year period, which was driven by the prior year tax impact associated with the besting of restricted stock awards issued in connection with the SEMA acquisition. After adjusting for special items that we believe do not reflect the underlying performance of our business, non-GAAP diluted EPS was $1.04 in the second quarter of 2024, compared to $1.11 in the prior year period.

Family: The effective tax rate on a non-GAAP basis was 25, 8% compared to 25, 5% for the prior year period.

Family: The diluted average share count was $55 8 million shares in the quarter.

Fahmi Karam: The diluted average share count was 55.8 million shares. Gap earnings per share was $0.61 in the second quarter compared to a loss per share of $0.83 in the prior year period, which was driven by the prior year tax impact associated with the divesting of restricted stock awards issued in connection with the ASEMA acquisition. After adjusting for special items that we believe do not reflect the underlying performance of our business, Non-Gas Diluted EPS was $1.04 in the second quarter of 2024, compared to $1.11 in the prior year period.

Family: GAAP earnings per share was <unk> 61 in the second quarter compared to a loss per share of <unk> 83 in the prior year period, which was driven by the prior year tax impact associated with divesting of restricted stock awards issued in connection with the <unk> acquisition.

Family: After adjusting for special items that we believe do not reflect the underlying performance of our business non-GAAP diluted EPS was $1 <unk> in the second quarter of 2024 compared to $1 11 in the prior year period.

Fahmi Karam: In the second quarter, we generated $600,000 of free cash flow, which decreased from $24.7 million in the prior year of period, primarily due to the increase of GMV at ASEMA. We distributed a quarterly dividend of $0.37 per share, and we finished the second quarter with a net leverage ratio of approximately 2.8 times.

Fahmi Karam: During the second quarter, we generated $600,000 of free cash, which decreased from $24.7 million in the prior year period, primarily due to the increase in GMB at Acima. We distributed a quarterly dividend of $0.37 per share, and we finished the second quarter with a net leverage ratio of approximately 2.8 times.

Family: During the second quarter, we generated $600000 of free cash flow, which decreased from $24 7 million in the prior year period, primarily due to the increase of GNP at FEMA.

Family: We distributed our quarterly dividend of <unk> 37 per share and we finished the second quarter with a net leverage ratio of approximately two eight times.

Fahmi Karam: Drilling down to the segment results starting on page 7. For ASEMA, double-digit year-over-year GMV growth continued for the third consecutive quarter. Following nearly 20% year-over-year growth in the prior two quarters, GMV grew 21% in the second quarter, and approximately 15% on a two-year stacked basis. The GMV list was driven by year-over-year growth in key underlying drivers, with active merchant locations up 9.8% year-over-year, more productivity per merchant, and applications increasing over 35%. Those tailwinds were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base.

Fahmi Karam: Drilling down to the segment results starting on page 7, for ACIMA, double-digit year-over-year GMV growth continued for the third consecutive quarter, following nearly 20% year-over-year growth in the prior two quarters. GMV grew 21% in the second quarter and approximately 15% on a two-year stacked basis. The GMV list was driven by year-over-year growth in key underlying drivers, with active merchant locations up 9.8% year-over-year, more productivity per merchant, and applications increasing over 35%.

Family: Drilling down to the segment results starting on page seven.

Family: For our sema double digit year over year GMB growth continued in the for the third consecutive quarter.

Family: Following nearly 20% year over year growth in the prior two quarters GMB grew 21% in the second quarter and approximately 15% on a two year stacked basis.

Family: The GMB lift was driven by year over year growth in key underlying drivers with active merchant locations up nine 8% year over year more productivity per merchant and applications increasing over 35%.

Fahmi Karam: Those tailwinds were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base. The net asset value of inventory under lease was up approximately 23% year-over-year.

Family: Those tailwind were partially offset by lower approval rates as we remain disciplined in our underwriting approach as inflation continues to impact our core consumer base.

Fahmi Karam: The net asset value of inventory under lease was up approximately 23% year-over-year. Revenue increased 19% year-over-year, including an 18.2% increase in rentals and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year. Least charge-offs for the ASEMA segment were 9.6%, 70 basis points higher year-over-year and flat sequentially. The year-over-year increase in ASEMA's lease charge-offs was in line with our expectations as the A now leases originated on the legacy decision engine continued to wind down. The conversion will strengthen our underwriting capabilities and should reduce lease charge-off rates as prior cohorts from the legacy system wind down throughout the year.

Family: The net asset value of inventory under lease was up approximately 23% year over year.

Fahmi Karam: Revenue increased 19% year-over-year, including an 18.2% increase in rental and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year. Lease charge-offs for the ASEMA segment were 9.6%, 70 basis points higher year-over-year, and flat. The year-over-year increase in Acima's lease charge-offs was in line with our expectations as the a-now leases originated on the legacy decision engine continue to wind down.

Family: Revenue increased 19% year over year, including an 18, 2% increase in rentals and fees revenue and a 22% increase in merchandise sales revenue due to a larger portfolio at the beginning of the second quarter compared to last year.

Family: These charge offs for the Athima segment were nine 6% 70 basis points higher year over year and flat sequentially.

Family: The year over year increase in our seamless lease charge offs was in line with our expectations as the a now leases originated on the legacy decision engine continue to wind down.

Family: The conversion will strengthen our underwriting capabilities and should reduce lease charge off rates as prior cohorts from the legacy system wind down throughout the year.

Fahmi Karam: The conversion will strengthen our underwriting capabilities and should reduce lease charge-off rates as prior cohorts from the legacy system wind down throughout the year. However, operating costs, excluding lease charge-offs, were up, on a dollar basis, approximately $4.6 million in the second quarter, which was 60 basis points lower as a percentage of revenue.

Fahmi Karam: Operating costs, excluding lease charge-offs, were up on a dollar basis approximately 4.6 million in the second quarter, which was 60 basis points lower as a percentage of revenue. Adjusted evadav 81.3 million was up 4.5% year-over-year, primarily due to the 19% increase in revenue that was partially offset by a 22.5% increase in cost of goods sold. Adjusted evadav margin of 14.7% increase approximately 310 basis points sequentially, and decrease approximately 210 basis points year-over-year, primarily due to a 190 basis point contraction of gross margin compared to the second quarter of 2023. The decrease in gross margins compared to the prior year was a result of a few factors, including a growing portfolio, where revenue lagged UMV production, an increase in merchandise sales, which represented a larger percentage of revenue compared to the prior year period, and the conversion of acceptance now locations to the ASEMA platform, which increases merchandise depreciation expense and costs of good sold.

Family: Operating costs, excluding lease charge offs were up on a dollar basis, approximately $4 6 million in the second quarter, which was 60 basis points lower as a percentage of revenue.

Fahmi Karam: Adjusted EBITDA of $81.3 million was up 4.5% year-over-year, primarily due to the 19% increase in revenue that was partially offset by a 22.5% increase in cost of goods sold. Adjusted EBITDA margin of 14.7% increased approximately 310 basis points sequentially and decreased approximately 210 basis points year over year, primarily due to a 190 basis point contraction of gross margin compared to the second quarter of 2023. The decrease in gross margins compared to the prior year was the result of a few factors, including a growing portfolio where revenue lags GMV production, an increase in merchandise sales, which represented a larger percentage of revenue compared to the prior year period, and the conversion of Acceptance Now locations to the SEMA platform, which increases merchandise depreciation expense and cost of goods sold.

Speaker Change: Adjusted EBITDA of $81 3 million was up four 5% year over year, primarily due to the 19% increase in revenue that was partially offset by 22, 5% increase in cost of goods sold.

Family: Adjusted EBITDA margin of 14, 7% increased approximately 310 basis points sequentially and decreased approximately 210 basis points year over year, primarily due to a 190 basis point contraction of gross margin compared to the second quarter of 2023.

Family: The decrease in gross margins compared to the prior year was a result of a few factors, including a growing portfolio, whereas revenue lags DMV production, an increase in merchandize sales, which represented a larger percentage of revenue compared to the prior year period.

Family: And the conversion of acceptance now locations to the seamless platform, which increases merchandize depreciation expense in cost of goods sold.

Fahmi Karam: Evidav margins were impacted by higher labor costs, underwriting costs as application volumes significantly surpassed a prior year, and the performance of the legacy A now portfolio, increasing our LCO rates. All of these headwinds were in line with our expectations, were included in our guide for the year, and are expected to improve as we get into the second half of this year. For the Rent and Center segment, at quarter end, the same store lease portfolio value was up 1.4% year over year, while same store sales increased 2.6% year over year, improving from an 80 basis point increase in the first quarter of 2024.

Fahmi Karam: EBITDA margins were impacted by higher labor costs, underwriting costs as application volume significantly surpassed the prior year, and the performance of the legacy ANOW portfolio increasing our LCO rate. All of these headwinds were in line with our expectations, were included in our guide for the year, and are expected to improve as we get into the second half of this year for the Rent-A-Center segment. At quarter end, the same-store lease portfolio value was up 1.4% year-over-year, while same-store sales increased 2.6% year-over-year, improving from an 80 basis point increase in the first quarter of 2024.

Family: EBITDA margins were impacted by higher labor costs underwriting cost as application volume significantly surpassed the prior year and the performance of the legacy Hay now portfolio, increasing our LCL right.

Family: All of these headwinds were in line with our expectations were included in our guide for the year and are expected to improve as we get into the second half of this year.

Family: Okay.

Speaker Change: For the rent a center segment at quarter end, the same store lease portfolio value was up one 4% year over year, while same store sales increased two 6% year over year, improving from an 80 basis point increase in the first quarter of 2024.

Fahmi Karam: Total segment revenue grew year over year for the second consecutive quarter, increasing 1.9% compared to the second quarter of 2023, and improving from a 20 basis point year-over-year increase in the first quarter of this year. The increase in revenue was driven primarily by 2.1% year-over-year increase in rentals and fees revenue, while second quarter merchandise sales revenue increased 1.6% year-over-year, and improvement from a 3.6% decrease in the first quarter. Leads charge-offs were 4.2% of revenue in the second quarter, 30 basis points lower year over year, and 50 basis points lower sequentially, a result of ongoing underwriting and account management efforts.

Fahmi Karam: Total segment revenue grew year-over-year for the second consecutive quarter, increasing 1.9% compared to the second quarter of 2023 and improving from a 20 basis point year-over-year increase in the first quarter of this year. The increase in revenue was driven primarily by a 2.1% year-over-year increase in rental and fees revenue. While second quarter merchandise sales revenue increased 1.6% year-over-year, an improvement from a 3.6% decrease in the first quarter, lease charge-offs were 4.2% of revenue in the second quarter, 30 basis points lower year over year and 50 basis points lower sequentially, as a result of ongoing underwriting and account management efforts.

Family: Total segment revenue grew year over year for the second consecutive quarter, increasing one 9% compared to the second quarter of 2023 and improving from a 20 basis point year over year increase in the first quarter of this year.

Family: The increase in revenue was driven primarily by two 1% year over year increase in rentals and fees revenue, while second quarter merchandize sales revenue increased one 6% year over year and an improvement from a three 6% decrease in the first quarter.

Family: These charge offs were four 2% of revenue in the second quarter 30 basis points lower year over year, and 50 basis points lower sequentially, a result of ongoing underwriting and account management efforts.

Fahmi Karam: 30-day past due rates averaged 2.7% for the second quarter, up 10 basis points from the prior year period and 40 basis points lower sequentially. Adjusted EBITDA margin for the second quarter decreased 160 basis points year over year to 16.3%, primarily due to higher operating expenses, including elevated labor benefit costs, delivery costs, and SOAR technology investments. This is reflected by a 150 basis point year-over-year increase in the ratio of non-GAAP operating expenses, excluding lease charge-offs, to segment revenue.

Fahmi Karam: 30-day past-due rates averaged 2.7% for the second quarter, up 10 basis points from the prior year period and 40 basis points lower sequentially. Adjusted EBITDA margin for the second quarter decreased 160 basis points year-over-year to 16.3%, primarily due to higher operating expenses, including elevated labor benefit costs, delivery costs, and SOAR technology.

Family: 30 day past due rates averaged two 7% for the second quarter up 10 basis points from the prior year period, and 40 basis points lower sequentially.

Family: Adjusted EBITDA margin for the second quarter decreased 160 basis points year over year to 16, 3%, primarily due to higher operating expenses, including elevated labor benefit cost delivery cost and store technology investments.

Fahmi Karam: This is reflected by a 150 basis point year-over-year increase in the ratio of non-GAAP operating expenses excluding lease charge-offs to segment revenue. For the Mexico segment, Adjusted EBITDA was higher year over year, and the Franchise segment's Adjusted EBITDA was lower. Non-GAAP corporate expenses were approximately 7% higher compared to the prior year, primarily due to additional investments in technology and Shifting to the Financial Outlook.

Family: This is reflected by a 150 basis point year over year increase in the ratio of non-GAAP operating expenses, excluding lease charge offs of segment revenue.

Fahmi Karam: For the Mexico segment, Adjusted EBITDA was higher year over year, and a franchise segment, Adjusted EBITDA was lower. Non-GAAP corporate expenses were approximately 7% higher compared to the prior year, primarily due to additional investments in technology and people.

Family: For the Mexico segment, adjusted EBITDA was higher year over year, and our franchise segment adjusted EBITDA was lower.

Family: non-GAAP corporate expenses were approximately 7% higher compared to the prior year, primarily due to additional investments in technology and people.

Fahmi Karam: Shifting to the financial outlook. Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment, we are pleased to raise the midpoint of our full year 2024 targets for revenue, adjusted EBITDA, and non-GAAP saluted EPS. Our portfolio and GMB growth, coupled with low delinquencies, give us confidence that we can improve margins in the second half of the year and achieve these updated targets. Our forecast continues to assume a generally stable macro environment with durable goods demanding under pressure, and continue discipline in our underwriting. At a SEMA, we'll start comping against higher growth rates in the third quarter, so we expect GMB growth to drop from the 20% area we've achieved for three consecutive quarters to low double digits in the upcoming quarter.

Family: Shifting to the financial outlook.

Fahmi Karam: Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment, we are pleased to raise the midpoint of our full-year 2024 targets for revenue, adjusted EBITDA, and non-GAAP diluted EPS. Our portfolio and GMB growth, coupled with low delinquencies, give us confidence that we can improve margins in the second half of the year and achieve these updated targets. Our forecast continues to assume a generally stable macro environment, with durable goods demand remaining under pressure, and continued discipline in our underwriting.

Family: Considering our sustained momentum through the first half of the year and the latest projections for the macroeconomic environment. We are pleased to raise the midpoint of our full year 2024 targets for revenue adjusted EBITDA and non-GAAP diluted EPS.

Family: Our portfolio and GMB growth, coupled with low delinquencies give us confidence that we can improve margins in the second half of the year and achieved these updated targets.

Family: Our forecast continues to assume a generally stable macro environment with durable goods demand remaining under pressure and continued discipline in our underwriting.

Fahmi Karam: At ASEMA, we'll start comping against higher growth rates in the third quarter. We expect GMB growth to drop from the 20% area we've achieved for three consecutive quarters to low double digits in the upcoming. Rent-A-Center's portfolio value is expected to seasonally drop in the third quarter from the second quarter, similar to the prior year. For both SEMA and Rent-A-Center, we expect third-quarter revenue to follow the same sequential pattern as in 2023, with a slight increase sequentially at Acima due to a growing portfolio.

Speaker Change: I had a FEMA will start comping against higher growth rates in the third quarter. So we expect GMB growth had dropped from the 20% area. We've achieved for three consecutive quarters to low double digits in the upcoming quarter.

Fahmi Karam: Renaissance portfolio value is expected to seasonally drop in the third quarter from the second quarter, similar to the prior year. For both the SEMA and Renaissance Center, we expect third quarter revenue to follow the same sequential pattern as in 2023, with a slight increase sequentially at a SEMA due to a growing portfolio. We expect losses to remain within our previous guidance commentary for the year, with Rene Center experiencing a typical seasonal uptick in the third quarter from the second quarter and to be in the four and a half percent range. Aseema losses are expected to improve in the third quarter at the legacy A-now for folio continues to wind down and finish in the nine percent area for the quarter.

Family: Rent a center's portfolio value is expected to seasonally drop in the third quarter from the second quarter similar to the prior year.

Family: For both the Sema and rent a center, we expect third quarter revenue to follow the same sequential pattern as in 2023 with a slight increase sequentially at <unk> due to our growing portfolio.

Family: We expect losses to remain within our previous guidance commentary for the year with rent a center experiencing a typical seasonal uptick in the third quarter from the second quarter and to be in the four 5% range.

Fahmi Karam: We expect losses to remain within our previous guidance commentary for the year, with Rent-A-Center experiencing a typical seasonal uptick in the third quarter from the second, and to be in the four and a half percent range. FEMA losses are expected to improve in the third quarter as the Legacy A-NOW portfolio continues to wind down and finish in the 9% area for the quarter. In terms of adjusted EBITDA margins for the third quarter, the Rent-A-Center segment will follow a similar seasonal trend from Q2 to Q3, as we experienced last year, and be down sequentially to the mid-teens area. The store optimization efforts this past quarter will have a minimal impact on the financials for the year.

Family: Our CMO losses are expected to improve in the third quarter at the legacy now portfolio continues to wind down and finishing the 9% area for the quarter.

Fahmi Karam: In terms of adjusted Imidon margins for the third quarter, the Rene Center segment will follow a similar seasonal trend from Q2 to Q3 as we experienced last year and be down sequentially to the mid-teens area. The store optimization efforts this past quarter will have a minimal impact on the financials for the year, with pressure on total segment revenues offset by lower expenses, which should slightly improve adjusted Imidon margins going forward. We expect Aseema to realize an improvement in adjusted Imidon margins sequentially as flow through from higher GMV continues to benefit the P&L and from lower loss rates.

Family: In terms of adjusted EBITDA margins for the third quarter. The rent a center segment will fall a similar seasonal trend from Q2 to Q3, as we experienced last year and be down sequentially to the mid teens area.

Family: The store optimization efforts this past quarter, we will have a minimal impact to the financials for the year with pressure on total segment revenues offset by lower expenses, which should slightly improve adjusted EBITDA margins going forward.

Fahmi Karam: The pressure on total segment revenues will be offset by lower expenses, which should slightly improve adjusted EBITDA margins going forward. We expect Acima to realize an improvement in adjusted EBITDA margin, as flow-through from higher GMV continues to benefit the P&L and from lower losses. If trade-down activity continues to expand, GMV could improve from our guidance today. We are assuming a fully diluted average share count of 55.8 million shares for the quarter, with no share repurchases assumed in our guidance.

Family: We expect the sema to realize an improvement in adjusted EBITDA margin sequentially as flow through from higher <unk> continues to benefit the P&L and from lower loss rates.

Fahmi Karam: If trade-down activity continues to expand, GMV could improve from our guidance today. We are assuming a fully diluted average share count of 55.8 million shares for the quarter, with no share repurchases assumed in our guidance. Interest expense in our tax rates are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of 90 cents to $1. For the quarter, we expect to generate 60 to 75 million of free cash flow and increase sequentially to the pace of growth changing at Aseema, lower inventory purchases at Rene Center, and timing related to other working capital needs that were recorded in the second quarter.

Family: If trade down activity continues to expand <unk> could improve from our guidance today.

Family: We are assuming a fully diluted average share count of $55 8 million shares for the quarter with no share repurchases assumed in our guidance.

Fahmi Karam: Interest expense and our tax rates are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of $0.90 to $1. For the quarter, we expect to generate $60 to $75 million of free cash flow, and it will increase sequentially due to the pace of growth changing at ACIMA, lower inventory purchases at Rent-A-Center, and timing related to other working capital needs that were recorded in the second quarter.

Family: Interest expense and our tax rate are expected to be similar to the second quarter, resulting in a non-GAAP EPS range for the third quarter of 90 to one dollar.

Family: For the quarter, we expect to generate $60 million to $75 million of free cash flow and increased sequentially due to the pace of growth changing at sema lower inventory purchases at rent a center and timing related to other working capital needs that were recorded in the second quarter.

Fahmi Karam: For the year, we are revising revenues to be in the $4.1 billion to $4.3 billion range, adjusted EBITDA to be $465 million to $485 million, and we're tightening our fully year guide to a non-GAAP EPS to a range of $3.65 per share to $4 per share. Our 2024 outlook reflects our continuous focus on execution to drive sustainable and profitable growth. The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue, a 5% increase in adjusted EBITDA, and an 8% increase in non-GAAP EPS with no share repurchases assumed. Our ability to navigate this challenging environment and generate earnings growth at both segments while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value.

Fahmi Karam: For the year, we are revising revenues to be in the $4.1 billion to $4.3 billion range, and adjusted EBITDA to be $465 million to $485 million. And we're tightening our full year guide of non-GAAP ETFs to a range of $3.65 per share to $4 per share.

Family: For the year, we are revising revenues to be in the $4 1 billion to $4 $3 billion range adjusted EBITDA to be 465 million to $485 million and we're tightening our full year guidance of non-GAAP EPS to a range of $3 65 per share to $4 per share.

Fahmi Karam: Our 2024 outlook reflects our continued focus on execution to drive sustainable and profitable growth. The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue, a 5% increase in adjusted EBITDA, and an 8% increase in non-GAAP EPS with no share repurchases assumed. Our ability to navigate this challenging environment and generate earnings growth in both segments while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value. In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time and an experienced management team that allocates those cash flows in support of our strategic priorities.

Family: Our 2024 outlook reflects our continued focus on execution to drive sustainable and profitable growth.

Family: The midpoint of our revised guidance compared to 2023 represents a 4% increase in revenue a 5% increase in adjusted EBITDA and an 8% increase in non-GAAP EPS with no share repurchases assumed.

Family: Our ability to navigate this challenging environment and generate earnings growth at both segments, while meeting our margin and loss targets is a testament to the entire team's effort and dedication to drive shareholder value.

Fahmi Karam: In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time, and an experienced management team that allocates those cash flows in support of our strategic priorities. Our first priority continues to be supporting growth with profitable leases and innovative ideas that will improve our customer interactions and merchant outcomes. Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchases. I'm pleased to share that during the second quarter, we optimize our capital structure and support of our long-term capital allocation priorities.

Family: In terms of capital allocation, we have a proven business model that generates strong operating cash flows over time.

Family: And an experienced management team to allocate those cash flows in support of our strategic priorities.

Fahmi Karam: Our first priority continues to be supporting growth with profitable leases and innovative ideas that will improve our customer interactions and merchant outcomes. Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchase. I'm pleased to share that during the second quarter, we optimized our capital structure in support of our long-term capital allocation priorities, capitalizing on our strong recent performance and favorable market conditions. We refinanced our term loan debt, which resulted in over 60 basis points of annual interest savings, while also extending the maturity of our $550 million ABL revolver through 2029.

Family: Our first priority continues to be supporting growth with profitable leases and innovative ideas that will improve our customer interactions and merchant outcomes.

Family: Concurrently, we will focus on enhancing shareholder value by maintaining our commitment to our dividend program and being opportunistic regarding share repurchases.

Family: I am pleased to share that during the second quarter, we optimize our capital structure in support of our long term capital allocation priorities.

Fahmi Karam: Capitalizing on our strong recent performance and favorable market conditions, we re-financed our term loan debt, which resulted in over 60 basis points of annual interest savings, while also extending the maturity of our 550 million ABL revolver through 2029. Combined, these enhancements to our capital structure secure our liquidity position while reducing the cost of capital for the company. We expect the balance of our free cash flow this year will go towards deleveraging as we progress toward a net leverage ratio of under two times and towards our long-term target of one and a half times. We ended the second quarter at 2.8 times, up from 2.7 times at the end of the first quarter due to an increase in working capital needs to support GMV growth.

Family: Capitalizing on our strong recent performance and favorable market conditions, we refinanced our term loan debt, which resulted in over 60 basis points of annual interest savings, while also extending the maturity of our $550 million ABL revolver through 2029.

Fahmi Karam: Combined, these enhancements to our capital structure secure our liquidity position while reducing the cost of capital for the company. We expect the balance of our free cash flow this year will go towards deleveraging as we progress towards a net leverage ratio of under two times and towards our long-term target of one and a half times. We ended the second quarter at 2.8 times, up from 2.7 times at the end of the first quarter, due to an increase in working capital needs to support GMV growth.

Family: Combined these enhancements to our capital structure secure our liquidity position, while reducing the cost of capital for the company.

Family: We expect the balance of our free cash flow. This year will go towards deleveraging as we progress towards a net leverage ratio of under two times and toward our long term target of one five times.

Family: We ended the second quarter at two eight times up from two seven times at the end of the first quarter due to an increase in working capital needs to support DMV growth.

Fahmi Karam: The strength of our balance sheet helps to insulate us from market volatility and enables us to act confidently and decisively when pursuing our strategic priorities. As of quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest during periods of broader uncertainty, whether supporting our home grown initiatives or targeted in organic opportunities.

Fahmi Karam: The strength of our balance sheet helps to insulate us from market volatility and enables us to act confidently and decisively when pursuing our strategic priorities. As of quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest during periods of broader uncertainty, whether supporting our homegrown initiatives or targeted inorganic opportunities.

Family: The strength of our balance sheet helps to insulate us from market volatility and enables us to add continentally and decisively when pursuing our strategic priorities.

Family: As of quarter end, we carried nearly half a billion dollars of available liquidity, which enables us to invest during periods of broader uncertainty, whether supporting our homegrown initiatives or targeted inorganic opportunities.

Fahmi Karam: Rapping up on slide 11, we're encouraged by the company's sustainable minimum across the first half of this year, which included top-line growth at both primary segments. GMV growth at ASEMA and same-store sales growth at Renacenter and importantly, a notable improvement in just the EBITDA margins at ASEMA in line with our low to mid-teens target. Our prudent risk management and account management strategies help deliver loss rates that were in line with our expectations and allowed us to raise the midpoint of our guidance as we look out across the balance of the year. Going forward, we will continue to execute against our day-to-day priorities to serve our customers and elevate our retail partners' businesses while pushing forward with new ideas and business strategies that will help us achieve our long-term growth plans.

Fahmi Karam: Wrapping up on slide 11, we're encouraged by the company's sustained momentum across the first half of this year, which included top-line growth at both primary segments. GMV growth at ASEMA and same-store sales growth at Rent-A-Center, and importantly, a notable improvement in adjusted EBITDA margins at ASEMA, in line with our low-to-mid-teens target. Our prudent risk management and account management strategies helped deliver loss rates that were in line with our expectations and allowed us to raise the midpoint of our guidance as we look out across the balance of the. Going forward, we will continue to execute against Thank you for your time this morning.

Family: Wrapping up on slide 11.

Speaker Change: We're encouraged by the company's sustained momentum across the first half of this year, which included topline growth at both primary segments GMB growth out of Sema and same store sales growth at rent a center and importantly, a notable improvement in adjusted EBITDA margins at a FEMA in line with our low to mid teens target.

Speaker Change: Our prudent risk management and account management strategies helped deliver loss rates that were in line with our expectations and allowed us to raise the midpoint of our guidance as we look out across the balance of the year.

Family: Going forward, we will continue to execute against our day to day priorities to serve our customers and elevate our retail partners' businesses, while pushing forward with new ideas and business strategy that will help us achieve our long term growth plans.

Fahmi Karam: Thank you for your time this morning.

Operator: Operator, you may now open the line for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: Thank you for your time. This morning, operator, you May now open the line for questions.

Operator: Operator, you may now open the line for questions. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your need to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Speaker Change: Thank you at this time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your needs beyond now.

Speaker Change: To withdraw your question. Please press star one one again.

Operator: To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. The first question will come from Cain, will come from, sorry about that, Vincent Caintic. Vincent, your line is open. Hi, good morning.

Speaker Change: Please standby, while we compile the Q&A roster.

Vincent Caintic: The first question will come from Cain. We will come from. Sorry about that. Vincent Cain tick.

Speaker Change: The first question will come from Kane.

Vincent Caintic: Sorry about that Vincent.

Vincent Caintic: Vincent, your line is open.

Vincent Caintic: Vincent Your line is open.

Vincent Caintic: Hi. Good morning. Thanks for taking my questions and great results this quarter. First, I wanted to focus on that trade-down opportunity you've discussed, and it was very encouraging to see that 35% higher applications.

Vincent Caintic: Hi, good morning, Thanks for taking my questions and great results this quarter.

Vincent Caintic: Thanks for taking my questions and for the great results this quarter. First, I wanted to focus on that trade-down opportunity you discussed. And it was very encouraging to see that 35% higher application rate. I'm wondering if you could talk about how much that's lifting your business so far, the trade-down opportunity, or if you see more of that. And then you brought up Concora, and I was just wondering if there are opportunities to grow that with this trade-down opportunity, or if there's other ways to take advantage of that. Yeah, good morning, Vincent. This is Mitch.

Speaker Change: First I wanted to focus on debt.

Speaker Change: Trade down opportunity.

Vincent Caintic: A discussion and there was a.

Speaker Change: Very encouraging to see that 35% higher applications.

Vincent Caintic: I'm wondering if you did the trade-down opportunity if you see more of it, and then you brought up Concora and I was just wondering if there are opportunities to grow that with this trade-down opportunity, or if there's other ways to take advantage of that. Thank you.

Speaker Change: I'm wondering if you could talk about how much of that.

Speaker Change: Thats lifting your business so far the trade down opportunity, if we see more of it and then <unk>.

Speaker Change: Got up from core and I was just wondering if there are opportunities to grow that with this trade down opportunity.

Speaker Change: Or if there's other other ways to take advantage of that.

Mitch Fadel: Yeah, good morning, Vincentus Mitch. Thanks for the questions. Yeah, the trade-down is certainly front and center when we look at everything, everything, all the data, and certainly the advantage scores and things like that. And of course, you're hearing it throughout different businesses, and we're certainly no exception. With those 35% applications, you know, when you say how much comes from one place versus the other, we think about, you know, 10% growth in merchants, 50% growth on their direct and consumer, which is a small piece, but it's still, it's still drive some of that 21% GMV growth.

Mitch Fadel: Thanks for the question. Yeah, the trade down is certainly, certainly front and center when we look at everything, everything, all the data, and certainly the vantage scores and things like that. And, of course, you're hearing it throughout, throughout different businesses. And we're certainly no exception.

Speaker Change: Yes, good morning, Vincent this is Mitch.

Vincent Caintic: Thanks for the questions.

Mitch Fadel: Yes, the trade down is certainly certainly front and center when we look at everything everything.

Mitch Fadel: The data and so the advantage scores and things like that and of course, you're hearing that you are hearing it throughout throughout different businesses.

Mitch Fadel: With those 35% applications, you know, when you say how much comes from one place versus the other, we think about, you know, 10% growth in merchants. [inaudible] 50% growth on their direct-to-consumer business, which is a small piece, but it still drives some of that 21% GMB growth. So, you know, and then the productivity of the merchants really is where the trade down comes in, as well as our teams just doing a better job training those merchants and getting in first position in those stores or exclusivity and so forth.

Vincent Caintic: Certainly no exception with over 35% applications.

Speaker Change: When you say how much comes from one place versus the other we think about 10% growth in merchants.

Vincent Caintic: 50% growth on our direct to consumer which is a small piece, but it's still it's still drive some of that 21% GMB growth.

Mitch Fadel: So, you know, and then the productivity of the merchants really is where the trade-down comes in, as well as our teams just doing a better job training those merchants in getting in first position in those stores or exclusivity and so forth. And if I had to break down 21%, you know, tens with new merchants, you know, one or two maybe is coming from the direct to consumer, even though that's 50% growth, is a small number. And, you know, the rest is the combination of the trade-down and our sales team working with those merchants to get in a better position.

Vincent Caintic: So and then the productivity of the merchants really is where the trade down comes in as well as our teams just just doing a better job training those merchants and getting in first position in those stores or exclusivity and so forth. So.

Mitch Fadel: So, I don't know if I had to break down 21%, you know, tens with new merchants. You know, one or two maybe are coming from the direct-to-consumer, even though that's 50% growth, it's a small number, you know, the rest is a combination of the trade down and our sales team working with those merchants to get in a better position. So, you know, maybe it's somewhere between, I don't know, Fahmi, 30% and 40% of the 21%. It's kind of hard to put a number on it, but it's definitely a part of it.

Mitch Fadel: I don't know if I had to break down 21% tenths with new merchants.

Vincent Caintic: One or two maybe is coming from the direct to consumer even though that's 50% growth, it's a small number and.

Vincent Caintic: The rest is a combination of of the trade down and our sales team working with those merchants to get in a better position. So maybe it is somewhere between I don't know family 30, and 40% of the 21% it's kind of hard to put a number out but it's definitely part of it yes, I would say.

Mitch Fadel: So, you know, maybe it's somewhere between, I don't know, family 30 and 40% of the 21%; it's kind of hard to put a number on, but it's definitely part of it. Yeah, I would say, do I have breakdown the growth in GMV? And I think you covered image, which is, you know, about 50% of it, or just under 50% of it came from, from new merchant locations, yeah. Five percent of it came from the direct to consumer and the marketplace growth, and the right hand that came from merchant productivity, and that's probably where you see some of the trade-down impact.

Mitch Fadel: Yeah, I would say the way I would break down the growth in GMB, and I think you covered it, Mitch, which is about 50% of it, or just under 50% of it, came from new merchant locations. 5% of it came from direct-to-consumer and marketplace growth, and the rest of it came from merchant productivity, and that's probably where you see some of the trade-down impact. I would say it's more like 25% of our growth, 25, 30, 40, somewhere in that range, but it's not like 1% or 2%, it's definitely real, and we would expect it to continue, and if it accelerates, then there's even upside to our numbers. And the Concurah question.

Speaker Change: To breakdown the growth in <unk> and I think you covered image, which is about 50% of it are just under 50% of it came from from new merchant locations.

Vincent Caintic: 5% of it came from the direct to consumer in the marketplace growth in the rest of it came from merchant productivity and Thats, probably where you see some of the trade down impact. So maybe it's more like 25% of our growth 25, 30, 40 somewhere in that range, but it's not.

Mitch Fadel: Yeah, so maybe it's more like 25% of our growth, 25, 30, 40, somewhere in that range, but it's not that it's not like one or two percent; it's definitely real, and we would continue, we'd expect it to continue, and if it accelerates, then there's even upside to our numbers. And the concurra question, yes, I think with the second look provider, because it's still a sub-prime offering or near-prime offering with our retail partners, there's certainly a lot of interest in it as there's tightening above the near-prime tightening with the prime lenders. So, I think that does create opportunity.

Vincent Caintic: It's not like one or 2%, it's definitely real and we would continue we would expect it to continue and if accelerates then there's even upside to our numbers.

Speaker Change: On the.

Speaker Change: Concur a question yes.

Mitch Fadel: Yes, I think with the second look provider, because it's still a subprime offering or near prime offering with our retail partners, there's certainly a lot of interest in it as there's tightening above the near prime, and tightening with the prime lenders. So I think that does create opportunity. As we mentioned in our prepared comments, as Fahmi mentioned, the retailers really like that we're hearing lots of good anecdotal stories about liking the one-stop shopping and those kind of things. So it's kind of just taking off, but yeah, we do think that creates opportunity in this environment. Okay, great. That's very helpful. And actually, following up, it's a good segue.

Speaker Change: Yes, I think with the.

Speaker Change: Second look providers, because it's still a subprime offering or near prime offering with our retail partners. There's certainly a lot of interest in it is there is tightening above above the near prime tightening in the prime lenders. So I think that does create opportunity as we mentioned in our prepared comments as Sami mentioned.

Mitch Fadel: As we mentioned, in our retailers really like that we're hearing lots of good anecdotal stories about liking the one stop shopping and those kind of things. So, it's kind of just taking off, but yeah, we do think that creates opportunity in this environment.

Sami: Retailers really like we're hearing lots of good anecdotal stories about liking the one stop shopping and those kind of things. So it's kind of just taking off but yes, we do think that creates opportunity in this environment.

Mitch Fadel: Okay, great. That's very helpful. And actually following up, it's a good segue. Just I want to get a sense of maybe the merchant engagement and if those merchant discussions have evolved and changed, I guess, to your point about, you know, there's trading down and what's happening is that the higher credit providers are tightening up. And I would assume that there would be more merchant need for your product. So, if you could maybe talk about merchant engagement, now that's the opportunity there. Thank you. Yeah, I think that's certainly happening with our. It's from an SMB standpoint, when you think about 10% in that merchant growth year over year. You think about a couple of the signing just last quarter, a couple of the top 50 merchant retailers like Levin and Slumberland and more in the pipeline.

Mitch Fadel: Just, I want to get a sense of maybe the merchant engagement and if any of those merchant discussions have evolved and changed. I guess to your point about, you know, there's trading down, and what's happening is that the higher credit providers are tightening up, and I would assume that there'd be more merchant need for your product. So if you could maybe talk about merchant engagement now that the opportunity is there, yeah, I think that's certainly happening.

Speaker Change: Okay, Great. That's very helpful and actually following up it's a good segue just I want to get a sense of maybe the merchant engagement and if any of those merchant discussions have evolved and changed.

Speaker Change: Yes to your point about trading.

Speaker Change: <unk> down in <unk>.

Speaker Change: What's happening is that.

Speaker Change: The higher credit providers are tightening up and I would assume that there'll be more.

Speaker Change: Merchant need for your products. So if you could maybe talk about merchant engagement.

Speaker Change: The opportunities there. Thank you.

Mitch Fadel: From an SMB standpoint, when you think about 10% net merchant growth year over year, you think about a couple of the signings just last quarter, a couple of the top 50 furniture retailers like Levin and Slumberland, and more in the pipeline. So, yeah, I think that's definitely happening. The pipeline is robust.

Speaker Change: Yes, I think that's certainly happening where they're at.

Speaker Change: From an SMB standpoint, when you think about 10% number <unk> growth year over year, you think about a couple of the signing just last quarter a couple of the top 50 furniture retailers like Levine and slumberland.

Speaker Change: And more in the pipeline. So yes, I think that's definitely happening in the pipeline is robust the team the team at Sema is doing a great job, bringing bringing in new partners and obviously the bigger the partner the longer this cycle runs, but the regionals are bringing in and the smbs are bringing in they are just.

Mitch Fadel: The team at Acima is doing a great job bringing in new partners. Obviously, the bigger the partner, the longer the cycle runs, but the regionals they're bringing in and the SMBs they're bringing in, they're just doing an excellent job. Okay, great. Very helpful. Thank you. Thanks, Vincent.

Mitch Fadel: So, yeah, I think that's definitely happening. The pipeline is robust. The team is doing a great job bringing in new partners.

Mitch Fadel: Obviously, the bigger the partner, the longer the cycle runs, but the regionals they're bringing in and SMBs are bringing in, they're just doing an excellent job. Okay, great. Very helpful.

Speaker Change: They are just doing an excellent job.

Speaker Change: Okay, great very helpful. Thank you.

Vincent Caintic: Thank you. Thanks, Vincent.

Speaker Change: Vincent.

Operator: Thank you. Please stand by for the next question. The next question comes from Hoang Nguyen with TD Cowan.

Vincent Caintic: Thank you. Please stand by for the next question. The next question comes from Hoang Nguyen with TD Cowan. Your line is now open.

Speaker Change: Thank you please standby for the next question.

Speaker Change: The next question comes from Hong Zhang with TD Cowen. Your line is now open.

Hoang Nguyen: Your line is now open. Hi, team.

Hoang Nguyen: Hi team and congratulations on the quarter. Looks like you guys raised the high-end revenue guidance but didn't raise the high-end for EBITDA and EPS. Can you touch a little bit on the rationale behind that? I mean, does it have to do with more mix of merchandise sales versus rental and have a follow up? Morning, Hoang.

Hong Zhang: Hi team and congratulations on the quarter.

Hoang Nguyen: Congratulations on the quarter. Just want to touch on the guidance. Looks like you guys raised the high-end revenue guidance, but I mean, didn't raise the high-end for EBITDA and EPS. I mean, can you touch a little bit on the rationale behind that? I mean, does it have to do with more mix of merchandise sales versus rental and have a follow-up?

Hong Zhang: I just wanted to touch on the guidance. It looks like you guys raised the high end revenue guidance, but didn't raise the high end for EBITDA in <unk>.

Speaker Change: UBS I mean can you touch a little bit on the rationale behind that I mean does it have to do with more mix of merchandise sales with its rental and had a follow up.

Fahmi Karam: Morning, Hoang. Thanks for the question. Yeah, I think the guide for the year, especially on the revenue side, really reflects the GMV growth that we've experienced over the last couple of quarters, obviously. The third quarter in a row where we had nearly 20% growth in GMV, and we started to reflect that now into the revenue guide. As far as the margin profile goes, I think we talked a little bit about it last time as far as having some really tough comps coming in to the year, especially in the first half. We think that improves when we get into the second half, especially on the ACMA side.

Fahmi Karam: Thanks for the question. Yeah, I think the guide for the year, especially on the revenue side, really reflects the GMV growth that we've experienced over the last couple quarters. Obviously, this is the third quarter in a row where we've had nearly 20% growth in GMV, and we've started to reflect that now in the revenue guide. As far as the margin profile goes, I think we talked about it a little bit last time as far as having some really tough comps coming into the year, especially in the first half. We think that it improves when we get into the second half, especially on the ASEMA side.

Speaker Change: Good morning, Hong Thanks for thanks for the question, Yes, I think the guide for the year, especially on the revenue side really reflects the GMB growth that we've experienced over the last couple of quarters. Obviously this is the third quarter in a row, where we've had nearly 20% growth in <unk> and we started to reflect that now into.

Speaker Change: Into the revenue.

Speaker Change: The guide as far as the margin profile goes I think we talked a little bit about it last time as far as having some really tough comps coming into the year, especially in the first half we think that improves when we get into the second half, especially on the.

Speaker Change: <unk> side on the seamless side Q2, starting to see some of that flow through from GMB come into play. So Q2 was better than Q1, and we expect Q3 to be better than.

Fahmi Karam: The ACMA side, Q2, started to see some of that flow through from GMV, come into play, so Q2 was better than Q1, and we expect Q3 to be better than Q2. Nothing really for as far as the mix goes, just more where the trends have been heading towards the margin profile for the year and then where revenue is coming in. I think for Q3, the guide is consistent and we'll be up on the revenue side and then flat, slightly better on the margin side. I think I did that hung the Smith, the, as FAMI mentioned, as we talked about last quarter. The margins take a little longer to catch up with the large GMV growth.

Fahmi Karam: On the ASEMA side, Q2, we started to see some of that flow through from GMV come into play, so Q2 was better than Q1, and we expect Q3 to be better than Q2. Nothing really as far as the mix goes, just more kind of where the trends have been heading towards the margin profile for the year, and then where revenue's coming in. I think for Q3, the guide is consistent.

Speaker Change: In Q2, and so nothing really for as far as the mix goes.

Speaker Change: Just more of kind of where the trends have been heading towards the margin profile for the year, and then where revenues coming in I think for Q3 to the guide is consistent with what we will be up on the revenue side and then <unk>.

Fahmi Karam: We'll be up on the revenue side, and then flat to slightly better on the margin side. Yeah, I think I'd add to that, Hoang. As Fahmi mentioned, You know, as we talked about last quarter, the margins take a little longer to catch up with the large GMV growth. We saw that this quarter, right, with the 310 basis point improvement and a seamless EBITDA margin. So you're starting to see that flow through, and there's more to come.

Speaker Change: Flat to slightly better on the margin side, I think I'd add to that Hong this is Mitch.

Speaker Change: His family mentioned.

Speaker Change: As we talked about last quarter, the margins take a little longer to catch up with the large GMB growth. We saw this quarter right with the 310 basis point improvement in our seamless EBITDA margin, so you're starting to see that flow through and theres more to come but it does run a little behind the revenues.

Fahmi Karam: We saw at this quarter with the 310 basis point improvement in ACMA's EBITDA margin, so you're starting to see that flow through, and there's more to come, but it does run a little behind the revenue as kind of the short answer to your question. And I also say, from a guidance standpoint, yet to remember, we had a lot of momentum going into the year. In the fourth quarter, we had almost 20% GMV growth in ACMA and run the center of starting to turn positive on the same source sale. So we had momentum; we knew it was going to carry over.

Fahmi Karam: But it does run a little behind revenue, which is kind of the short answer to your question. And I'd also say, from a guidance standpoint. You've got to remember, we had a lot of momentum going into the year.

Speaker Change: Canada the short answer to your question and I would also say.

Speaker Change: From a guidance standpoint.

Speaker Change: You have to remember.

Speaker Change: We had a lot of momentum going into the year, we had in the fourth quarter, we had almost 20% GMB growth at Sema and rent a center is starting to turn positive on the same store sales. So we have momentum we knew it was going to carryover, we saw trade down coming those kinds of things in our original guide was was relatively stout when due.

Mitch Fadel: We had, in the fourth quarter, we had almost 20% GMV growth at Acima. In Renison, it was starting to turn positive for same-store sales. So we had momentum, and we knew it was going to carry over. We saw trade down, those kind of things. And our original guide was relatively stout.

Fahmi Karam: We saw trade-downcoming, those kind of things, and our original guide was relatively stout when you think about the revenue. Our original guide, the revenue was up 3% year over year, and the EPS was about 6%. And now we've updated it, and I'm just talking midpoints when I say this. Now revenue instead of 3% year over year is 5%. In EPS instead of 6% above last year to 8%. So we started out with pretty high numbers. We have a small raise here, but I just want to remind everybody we started out pretty high with the 3% year over year on the revenue. Now it's 5%, and EPS at 6%. Now it's 8%.

Mitch Fadel: When you think about revenue, our original guide, revenue was up 3% year over year, and the EPS was up about 6%. And now we've updated it, and I'm just talking midpoints when I say this, and now revenue, instead of 3% year over year, it's 5%, and EPS, instead of 6% above last year, it's 8%. So we started out with pretty high numbers. We have a small raise here, but I just want to remind everybody that we started out pretty high with the 3% year over year on revenue, and now it's 5%, and EPS at 6%, and now it's As the trade down continues, we hope to outperform.

Speaker Change: Think about the revenue at our original guide the revenue was up 3% year over year in the EPS is up about 6% and now we've updated it and I'm just talking mid points when I say this now revenue.

Speaker Change: <unk>, 3% year over year, it's 5% and EPS instead of.

Speaker Change: 6% above last year's 8%. So we started out with pretty high numbers. We have we have a small raised here, but I just wanted to remind everybody we started out pretty high with the.

Speaker Change: 3% year over year on a revenue announced five in EPS at 6% now, let's say in <unk>.

Fahmi Karam: And as trade-down continues, we hope to outperform.

Speaker Change: S trade down continues we hope to outperform but.

Fahmi Karam: But... We're pretty excited about the flow through. We're starting to see now, as I mentioned with that, when you look at the Assima margins compared to the first quarter. Got it.

Mitch Fadel: We're pretty excited about the flow-through. We're starting to see now, as I mentioned with that, when you look at the ASEMA margins compared to the first quarter, got it, and maybe you can talk a little bit about the court fight with the CFPB. You guys sued them in Texas. They sued us back in Utah.

Speaker Change: We're pretty excited about the flow through we're starting to see now as I mentioned with that when you look at the sema margins compared to the first quarter.

Speaker Change: Got it and maybe if you can talk a little bit about.

Mitch Fadel: And maybe you can talk a little bit about the court fight with the CFPB. You guys sued them in Texas; they sued back in Utah. I mean, can you talk high level about the next step in the process? Maybe in terms of the venue and what's the next mouse stone will be?

Speaker Change: The court.

Speaker Change: Caught sight with the CFPB you guys Sue them in Texas They sue.

Mitch Fadel: I mean, can you talk at a high level about the next step in the process? Maybe in terms of the venue and, you know, what the next milestone will be? Thank you. Well, I can't, you know; with ongoing litigation, you can't say a lot. My prepared comments have to suffice.

Tom: Tom can you talk high level about the next step in the process maybe in terms of the venue.

Speaker Change: What's the next milestone will be thank you.

Mitch Fadel: Thank you. Well, I can't, you know, with ongoing litigation, you can't say a lot; my parent comments have to suffice. As I said, my prepared comments, you know, we think they're form shopping by filing in it in Utah when there was already our case pending in Texas addressing the same, the same subject. So we'll strongly contest their claims and defend ourselves and defend ourselves from them, trying to, you know, take over state regulatory framework that's governed our industry for a long time, like I said, my prepared comments. But as far as next steps and all that, we'll have to leave it at that rather than get into a legal discussion about next steps.

Mitch Fadel: As I said, in my prepared comments, you know, we think they're forum shopping by filing in Utah when there was already our case pending in Texas addressing the same subject. So we'll strongly contest their claims and defend ourselves from them trying to, you know, take over the state regulatory framework that's governed our industry for a long time. Like I said, I'm going to prepare comments, but as far as next steps and all that, we'll have to leave it at that rather than get into a legal discussion about next steps. I'm not an attorney and, of course, they'd yell at me if I said any more than I've already said, anyway, so we'll have to leave it at that.

Speaker Change: Well I can't win.

Speaker Change: Ongoing litigation and can't say a lot from our prepared comments have to suffice as I said in my prepared comments. We think they are they are formed shopping by filing in Utah. When there was already our case pending in Texas addressing the same the same subjects. So.

Speaker Change: We will strongly contest their claims and defend ourselves defend ourselves from them trying to.

Speaker Change: Takeover state regulatory framework, that's governed our industry for a long time like consumer prepared comments, but as far as next steps and all that will have to leave it at that rather than getting into legal discussion about next steps.

Mitch Fadel: As you know, I'm not an attorney, and, of course, they'd yell at me if I say more than I've already said anyhow. So we'll have to leave it at that.

Speaker Change: I am not an attorney and of course, we would yell at me if I say more than I've already said anyhow. So we'll have to leave it at that.

Hoang Nguyen: Thank you. Thanks, Hong.

Mitch Fadel: Thank you. Thanks, Tom. Please stand by for the next question. The next question comes from Bobby Griffin with Raymond James. Your line is now open. Good morning, buddy.

Speaker Change: Thank you.

Tom: Thanks, Tom.

Bobby Griffin: Please stand by for the next question. The next question comes from Bobby Griffin with Raymond James.

Speaker Change: Please standby for the next question.

Speaker Change: The next question comes from Bobby Griffin with Raymond James Your line is now open.

Bobby Griffin: Your line is now open. Good morning, buddy. Thank you for taking my questions, and congrats on another recorder of momentum. Thanks, Bobby. So Mitch, my, my first question really is kind of on that on a high level aspect. It seems, if we look at your results as well as some other peers' results, the industry is really starting to see some inflection points, you know, whether it's on GMV growth, trade down the portfolio performance, etc. What could potentially derail that? I guess it's the question. Is it just availability of credit becoming more available again?

Bobby Griffin: Thanks for taking my questions and congrats on another good quarter of momentum. Thanks, Bobby. So, Mitch, my first question really is kind of on that, on a high-level aspect. It seems, if we look at your results as well as some of the peers' results, the industry is really starting to see some inflection points, you know, whether it's on GMV growth, trade-down, portfolio performance, et cetera. What could potentially derail that, I guess, is the question.

Bobby Griffin: Good morning, Brian Thanks for taking my questions and congrats on another good quarter of momentum.

Brian: Thanks, Bob.

Mitch Fadel: Is it just the availability of credit becoming more available again? Or, like, when you kind of sit here and you kind of think out on, you know, a multi-quarter and even kind of a year basis, what do you worry about that could derail some of this momentum? That's a good question.

Speaker Change: Mitch My first question really is kind of on that on a high level aspect. It seems if we look at your results as well as some other peers results. The industry is really starting to see some inflection points, whether it's on GMB growth trade down the portfolio performance et cetera, what could potentially derail that I guess is the question is it just the availability of credit become.

Speaker Change: More available again or like when you kind of sit here and you kind of think out on multi quarter and even kind of a year basis, what do you worry about that could derail some of this momentum.

Bobby Griffin: Or like when you kind of sit here and you kind of think out on, you know, multi-quartered, even kind of a year basis, what do you worry about that could derail some of this momentum? That's a, it's a good question. I, I, I see only, of course, I'm not, I'm usually the optimist in the room, but I see only positive things, dumbing, Bobby, with it, with it, with the trade down. Of course, we talk about all the time about how resilient we are and in a good economy, we did great. I mean, we were still trying to catch the record numbers we did from stimulus money.

Speaker Change: So good question.

Mitch Fadel: I see only positive things coming, Bobby, with the trade down. We talk all the time about how resilient we are and in a good economy, we do great. I mean, we're still trying to catch the record numbers we did from stimulus money. So when people have money, we do great, too. So it's such a resilient model.

Speaker Change: Yes.

Speaker Change: I see only Chris I'm not on mute.

Bobby Griffin: The optimist in the room, but I would say only positive things coming Bobby with the trade down of course, we talk about all the time about how resilient we are in a good economy, we did great and we.

Speaker Change: We're still trying to catch the record numbers, we did from stimulus money. So when people have money, we do great too.

Mitch Fadel: So when people have money, we do great too. So it's such a resilient model. I think you're seeing it now. Also, when, yes, some subprime traditional retail at subprime is having some headlands, right, with a lot of closures out there, but not the least known industry. I mean, Renaissance going positive as well as, of course, the alternative of a SEMA being within our retail partners is going strong, even though subprime retail, like I said, there's, there's a lot of closures. So we're, that's the benefit of our, of the lease on business model.

Speaker Change: Such a resilient model I think you're seeing it now.

Mitch Fadel: I think you're seeing it now. Also, when some subprime traditional retail at subprime is having some headwinds, right, with a lot of closures out there, but not the least owned industry. I mean, Rent-A-Center is going positive, as well as, of course, the alternative of Acima being within our retail partners is going strong, even though subprime retail, like I said, there's a lot of closures. So we're, That's the benefit of the lease-owned business model; it's there for all retailers, for those customers that don't have credit.

Speaker Change: Also one.

Speaker Change: Yes, some subprime traditional retail at subprime must have been some headwinds right with a lot of closures out there, but not the least known industry.

Speaker Change: I mean render centers.

Speaker Change: <unk> positive as well as of course, the alternative of a seam of being within our retail partners.

Speaker Change: Is going strong even though subprime.

Speaker Change: Retail.

Speaker Change: There's a lot of closures so.

Speaker Change: Sure.

Speaker Change: Thats the benefit of our of the lease some business model.

Mitch Fadel: It, it's, it's there for, for all retailers, for those customers that don't have, they don't have the credit, you don't, you don't have to start out in the subprime store, but there's, there's actually, Paul Wentz coming from even some of those closures, I mentioned, probably when you think about for companies like, or segments like Renaissance Center, so I don't know, Bobby, I'm not really, I don't, I just, I worry about our strategy and things like that, and are we executing and talk to the team all the time about execution? I worry; are we taking advantage of every opportunity and things like that? But as far as something derailing the trend, I just, I don't see anything.

Speaker Change: <unk>.

Speaker Change: It's therefore for all retailers for those customers that don't have don't have the credit you don't you don't have to start out in the subprime store, but there's actually.

Mitch Fadel: You don't have to start out in a subprime store, tailwinds coming from even some of those closures I mentioned, probably when you think about companies like or segments like Rent-A-Center. So I don't know Bobby. I'm not really. I just worry about our strategy and things like that and are we executing, and I talk to the team all the time about execution. I worry when if we are taking advantage of every opportunity, things like that. But as far as something derailing the trends, I just, I don't see anything. Fair enough; that's helpful.

Speaker Change: <unk> coming from even some of those closures I mentioned, probably when you think about for <unk>.

Bobby Griffin: Companies like or segments like rent a center, so I don't know Bobby I'm, not really I don't.

Bobby Griffin: I worry about our strategy and things like that and are we are we executing in and talk to the team all the time about execution.

Bobby Griffin: Are we taking advantage of every opportunity things like that but as far as something derailing the trends I just.

Speaker Change: Don't see any anything.

Mitch Fadel: No, that's helpful.

Mitch Fadel: And I guess my second question is kind of a combination question just on the Acima side of the business. I mean, first, you know, with the momentum that we are now seeing across the industry, and as well as your results, what are you seeing competitively? Is everybody still behaving from a competitive standpoint? Because I know competition is tough out there.

Speaker Change: Fair enough that's helpful and I guess my second question is kind of a combo question just on the <unk> side of the business I mean <unk>.

Mitch Fadel: And I guess my second question is kind of a combo question just on the assume side of the business. I mean, first, you know, with the momentum that we now are seeing across the industry and as well as your results, what are you seeing competitively? Is everybody still behaving from a competitive standpoint? Because there's no competition, it is tough out there. And then can you just define how you guys really define pipeline? Like, what are those active merchants that are in conversation about actually engaging, or is it just a list of potential merchants? Like, what exactly is in the pipeline where we know, you know, how real it is, and you know, how, you know, the timing, or maybe we can try to take an estimate of the timing of them becoming, you know, actual customers?

Speaker Change: The momentum that we now are seeing across the industry and as well as your results. What are you seeing competitively is everybody still behavior from a competitive standpoint that I know competition is tough out there and then can you just define how you guys really defined pipeline like what are those active merchants that are in conversation about actually engaging or is it just a list of.

Speaker Change: Merchants like what exactly is in the pipeline, where we know how how real it is and how the timing or maybe we can try to take an estimate at the timing of them becoming actual customers.

Mitch Fadel: When I say pipeline, I'm talking about active conversations, not just the list, you know, like, last quarter, we talked about there's some good regional players in the pipeline, and then we end up signing Levin, Slumberland, Purple, iFit, things like that. Some of those are regional furniture players, obviously, Purple, some more of a nationwide e-conplay for matches, even though they do have some stores and so forth. So, we're talking about active conversations, and of course, our sales team, field sales and insight sales, you know, a little over a hundred people. They've got tons of conversations going out with the one, two, and three star merchants, and they're up to ten percent; you're almost ten percent.

Mitch Fadel: And then can you just define how you guys really define pipeline? Like, what are those active merchants that are in conversation about actually engaging? Or is it just a list of potential merchants? Like what exactly is in the pipeline so we know, you know, how real it is?

Speaker Change: What I would say pipeline im talking about active conversations not just the list like last quarter, we talked about there is some good regional players in the pipeline and then and then we ended up signing Levin.

Mitch Fadel: And you know, how, you know, the timing, or maybe we can try to take an estimate of the timing of them becoming, you know, actual. When I say pipeline, I'm talking about active conversations, not just the list. You know, like last quarter, we talked about there being some good regional players in the pipeline, and then we ended up signing Levin, Slumberland, Purple, iFit, things like that. Some of those are regional furniture players. Obviously, Purple's more of a nationwide e-com play for mattresses, even though they do have some stores and so forth.

Speaker Change #101: Slumberland purple.

Speaker Change: Fit things like that.

Speaker Change: Some of those are regional furniture players, obviously purples Marvin nationwide.

Speaker Change: <unk> for matches, even though they do have some stores.

Mitch Fadel: So we're talking about active conversations. And of course, our sales team of Field Sales and Inside Sales, you know, a little over 100 people, they have tons of conversations going on with the 1 and 2 and 3 star merchants, and they're up 10% year over year, almost 10%, so they're knocking it out of the park as they have for many years. So competition is about the same; I wouldn't say competition's gotten any stiffer or crazier as far as offerings and things like that; I'd say that's been pretty consistent.

Speaker Change: So forth so.

Speaker Change: And we're talking about.

Speaker Change: Active conversations and then of course, our sales team.

Speaker Change: Field sales and inside sales.

Speaker Change: Well over 100 people there they've got tons of conversations going on with the one and two and three serve three star merchants and they're up 10% year over year, almost 10% so they're knocking it out of the park.

Mitch Fadel: So, they're not going out of the park as they have for many years. So, competition is about the same. I wouldn't say, I wouldn't say competition's gotten any stiffer or crazier, as far as offerings and things like that. I'd say that's been pretty consistent. Of course, competition on the run at center side is probably less than it was when we think about the store closures that are happening out there with some of our, not even direct competitors, but indirect competitors that do business similarly with the same customers. So, as I mentioned earlier, we see some of those closures as opportunities, especially on the run at center side.

Speaker Change: As they have for many years so.

Speaker Change: The competition is about the same I wouldn't say I won't say competition has gotten any stiffer or crazier as far as.

Speaker Change: Offerings and things like that I'd say, that's been pretty consistent of course competition on the rent a center side is probably.

Mitch Fadel: Of course, competition on the Rent-A-Center side is probably..., probably less than it was when we think about the store closures that are happening out there with some of our not even direct competitors but indirect competitors that do business similarly with the same customers. So, as I mentioned earlier, we see some of those closures as opportunities, especially on the Rent-A-Center side. Thank you. Very helpful. Best of luck here for the remainder of the year. Thanks, Bobby.

Speaker Change: Probably less than it was when we think about the store closures that are happening out there with some of our not even not direct competitors, but but indirect competitors.

Speaker Change: New business Similarly, with the same customer so as I mentioned earlier, we see some of those closures as opportunities, especially on the <unk> side.

Bobby Griffin: Thank you. Very helpful; best of luck here for the remainder of the year. Thanks, Bobbie.

Speaker Change: Thank you very.

Speaker Change: Very helpful. Best of luck here for the remainder of the year.

Bob: Thanks, Bob.

Brad Thomas: Please stand by for the next question. The next question comes from Brad Thomas with Key Bank Capital Markets.

Bobby Griffin: Please stand by for the next question. The next question comes from Brad Thomas with KeyBank Capital Markets. Brad, your line is open. Hi, good morning, and let me add my congratulations on some nice results here as well.

Speaker Change: Please standby for the next question.

Speaker Change: The next question comes from Brad Thomas with Keybanc capital markets. Brad Your line is open.

Brad Thomas: Brad, your line is open. Good morning.

Brad Thomas: Hi, Good morning, and let me add my congrats on some nice results here as well.

Fahmi Karam: And let me add my congrats on some nice results here as well.

Brad Thomas: I wanted to follow up a little bit more on the growth, Mitch. Yeah, absolutely. Well deserved.

Fahmi Karam: I wanted to follow up more on the growth match. Yeah, absolutely well deserved. I'm going to add a little bit more perspective on what you're seeing from a category perspective. And I say that with the.

Brad Thomas: I wanted to follow up on <unk>.

Speaker Change: Sure.

Speaker Change: On the growth much.

Speaker Change: Absolutely enrollment there.

Fahmi Karam: And I was hoping you could add a little bit more perspective on what you're seeing from a category perspective. And I say that with the knowledge that many of your end markets, the retailers, are seeing very challenging trends, so I'm curious what you're seeing from a category perspective in terms of some of those dynamics like new merchant growth and what you're seeing from the D2C and productivity standpoint as well. Thank you. Morning, Brad. This is Fahmi.

Speaker Change: And I was hoping you could add a little bit more perspective on what youre seeing from a category perspective, and I say that.

Speaker Change: Ed.

Speaker Change: The.

Fahmi Karam: The knowledge that the many of your end markets, the retailers are seeing very challenge trends, so curious what you're seeing from a category of perspective in terms of some of those dynamics like new merchant growth and what you're seeing from the DBC and productivity standpoint as well. Thank you.

Speaker Change: Knowledge that many of your end markets. The retailers are seeing very challenged strong. So just curious what youre seeing from a category perspective in terms of some of those dynamics like new merchant growth.

Speaker Change: And.

Speaker Change: What youre seeing from the D to C and productivity standpoint, as well thank you.

Fahmi Karam: Morning, Brad. This is Fahmi. Yeah, I think from a category standpoint, I think it's been pretty steady year over years as far as our mix of where the GMV is coming from, but I would say that we are starting to see some greater mix of coming through the EECOM channel. We've talked about Wayfair and Actually.com, so we've seen a greater mix of EECOM, which tends for us to be heavier on the furniture side. So when you look at the categories, I would say there's softer demand on furniture and some of those household categories that we've talked about, but for us, we're offsetting that with some of the productivity gains and some of the emerging gains that we've talked about.

Fahmi Karam: Yeah, I think from a category standpoint, I think it's been pretty steady year over year as far as our mix of where the GMB is coming from. But I would say that we are starting to see some, a greater mix coming through the e-comm channel. We've talked about Wayfair and actually.com.

Speaker Change: Good morning, Brian. This is Danny Yes, I think from a category standpoint, I think it's been pretty steady year over year as far as.

Speaker Change: Sure.

Speaker Change: Kind of our mix of where the <unk> is coming from but I would say that we are starting to see.

Speaker Change: Some a greater mix of coming through the E. Comm channel, we've talked about way fair and accurate dot com.

Speaker Change: So we've seen a greater mix of E com, which turns for us to be heavier on the furniture side. So when you look at the categories I would say theres softer demand on furniture and some of those households household goal categories that we've talked about but for us we're offsetting that with some of the productivity gains and some of the <unk>.

Fahmi Karam: So we've seen a greater mix of e-comm, which tends for us to be heavier on the furniture side. So when you look at the categories, I would say there's softer demand for furniture and some of those, you know, household goals categories that we've talked about. But for us, we're offsetting that with some of the productivity gains and some of the merchant gains that we've talked about. So even though furniture may have some softer demand, and applications on a per location basis may be down, what we're seeing is that 35% increase because of some of the things that we've talked about.

Speaker Change: <unk> gains that we've talked about so even though furniture may have some softer demand in applications on a per location basis may be down what we're seeing is that 35% increase because of some of the things that we've talked about so the mix is changing a little bit.

Fahmi Karam: So even though furniture may have some softer demand and applications on a per location basis may be down. What we're seeing is that a 35% increase because of some of the things that we've talked about. So the mix is changing a little bit as far as whether brick-and-mortar versus EECOM. I would say auto and jewelry also very strong. When we look year over year from a growth in applications and a growth in GMV standpoint. So it's pretty much the growth is coming across the board. We also talked about average ticket size; average ticket size has come down.

Fahmi Karam: So the mix is changing a little bit as far as brick and mortar versus e-comm. I would say auto and jewelry are also very strong when we look year over year from a growth in applications and a growth in GMB standpoint.

Speaker Change: As far as whether it brick and mortar versus versus E. Com I would say auto and jewelry also very strong when we look year over year from a growth in applications and a growth in <unk>.

Speaker Change: Standpoint, so it's pretty much the growth is coming across the across the board. We also talked about average ticket size average ticket size has come down.

Fahmi Karam: That's also partly of mix. Typically, our average ticket size is lower on the EECOM side, but there are some pricing benefits that we're seeing across the board as well. So some of that is also underwriting as we look to tighten on the bottom. We do cut the average ticket size. So obviously the growth is coming across the board across all categories.

Speaker Change: That's also partly of the mix typically our.

Speaker Change: Our average ticket size is lower on the E com side, but there are some.

Fahmi Karam: So it's pretty much growth is coming across the board. We also talked about average ticket size. Average ticket size has come down. That's also partly due to the mix.

Speaker Change: Some pricing benefits that we're seeing across the board as well so.

Speaker Change: Some of that is also underwriting as we look to tightened on the bottom we do cut the average ticket size. So so I would say the growth is coming across the board across all categories and when you add it when you add it up.

Mitch Fadel: Yeah, and when you add it up, it's well said. I mean, but Brad, when you add it up, it can be, let's say, less than intuitive, especially in the furniture business with a lot of people, public companies at least, and even private companies suck in negative things or sales and things like that. But when you add growth and trade down together, we still have growth in furniture. A good example of the large furniture company that reported numbers this morning was slightly negative, slightly negative revenue, but we're up with that merchant. Is that trade down? Is that because our product offering is the best product offering they have?

famine: Well said famine, but bread when you when you added up.

Speaker Change: <unk>.

Speaker Change: It can be it can be.

Speaker Change #105: Let's say less than intuitive.

Speaker Change: Especially in the furniture business with.

Speaker Change: With the business a lot of people public companies at least and even private companies saw a negative same store sales and things like that but.

Speaker Change: When you add growth in trade down together, we saw growth in furniture.

Speaker Change: Good example of the large furniture company that reported numbers. This morning was slightly negative slightly negative revenue, but were up with that merchant.

Speaker Change: And is that trade down is that because of our product offering is as is the best product offering. They have I don't know its probably a combination of all of that but we're up with their merchant. So we can be up with the merchants its down in revenue and then when you add 10% growth in merchants to that factor that I just mentioned and other.

Mitch Fadel: I don't know; it's probably a combination of all that, but we're up with that merchant. So we can be up with a merchant that's down in revenue. And then when you add 10% growth in merchants to that factor that I just mentioned, in other words, as fact, it had growth and trade down together, that's how you can be going the opposite way of maybe what people think is happening in the furniture industry. That's very helpful.

Speaker Change: <unk> had growth in trade down together, that's how you can be going the app as a way of maybe what people think is happening in the furniture industry.

Speaker Change #110: That's very helpful. Maybe to follow up a little bit on Bobby's question I don't know that I would say the railing.

Mitch Fadel: Maybe to follow up a little bit on Bobbi's question, I don't know that I'd say the railing, but a question that we get asked is sort of thinking about how different macro scenarios might impact you all. And so I guess the question that should be, you know, is maybe look at a year and think about potentially tail opportunities on the economy and if we get discretionary, really coming back, maybe how do you think that affects you and maybe vice versa if we show unemployment rise, you know, how do you think about group share? Yes, I think it's the resilience and the durability of the model.

Speaker Change: We get asked is sort of.

Speaker Change: Thinking about how different macro scenarios.

B: Impactful and so I guess the question mentioned B as you maybe look at a year.

Speaker Change: Essentially KL opportunities on the economy, and if we get discretionary I really coming back maybe how do you think that affects you and maybe vice versa. We saw unemployment rise.

Speaker Change #100: How do you think upon group shares.

Speaker Change #110: Yes, I think it's the resilience and the durability of the model when.

Mitch Fadel: If we get more at one end of the spectrum, maybe as the economy improves, you can start adding back some of the, what family just referred to from an underrated standpoint, the bottom, you can add some more back to the bottom, plus you get longer retention, especially on the runner's side when people have more money, so it helps the portfolio, so you can drive there eventually, maybe you lose some of the trade down on the other end, but that's the resiliency, how it just goes back and forth like a swing a little bit, and you end up strong in any economic environment. But I will say that as things like demand for household furnishings come back, that overall, I see that as very positive for a runner center and for a SEMA, or as people start moving again, interest rates come down and people start moving again, people buying starter homes, usually selling a lot, especially at that starter home category, and of course, the ones most affected by these mortgage rates. So as people, it's not just home people and loans, it'll start benefiting from people moving around again, it's also our industry with the household furnishings and even appliances. So I think there's just plenty of tailwinds to think about, and very few on the headwind side, because again, when things get a whole lot better, we still perform just the not just us, but the industry will still perform because of the reasons I've already said, and if it gets a lot worse to your point about it, unemployment could skyrocket again, we've certainly bent through those cycles, and we've done fine because you get even more trade down, so obviously we're pretty optimistic.

Speaker Change: If we get.

B: More.

B: Sure.

Fahmi Karam: Typically, our average ticket size is lower on the e-comm side, but there are some, you know, some pricing benefits that we're seeing across the board as well. So some of that is also underwriting. As we look to tighten on the bottom, we do cut the average ticket size.

B: At one end of the spectrum, maybe as the economy improves.

B: You can start adding back some of the family just referred to from an underwriting standpoint. The bottom you can add some more back to the bottom plus you get longer retention, especially on the rent a center side when people have more money. So it helps the portfolio. So you can.

Fahmi Karam: So I would say growth is coming across the board across all categories. And when you add it up, it's well said, Tammy. But Brad, when you add it up, it's...

B: Drive, they're eventually maybe lose some of the trade down on the other end, but thats the resiliency how it just it just goes back and forth like a like a swing a little bit and you ended up end up strong in any economic environment, but I will say that as is.

Mitch Fadel: It can be, it can be, let's say, less than intuitive, especially in the furniture business. A lot of people, public companies at least, and even private companies, are talking about negative same-store sales and things like that. But when you add growth and trade-down together, we still have growth in furniture. A good example of a large furniture company that reported numbers this morning had slightly negative revenue, but we're up with that merchant. Is that a trade-down, is that because our product offering is the best product offering to have? I don't know.

Mitch Fadel: It's probably a combination of all that, but we're up with that merchant. So we can be up with a merchant that's down in revenue. And then when you add 10% growth in merchants to that factor that I just mentioned, in other words, add growth and trade-down together, that's how you can be going the opposite way of maybe what people think is happening in the furniture industry. That's very helpful. Maybe to follow up a little bit on Bobby's question, I don't know that I'd say derailing, but a question that we get asked is sort of thinking about how different macro scenarios might impact you all.

B: Things like.

Mitch Fadel: And so I guess the question that should be, you know, is you maybe look at a year and think about potentially the tail opportunities in the economy. And if we get discretionary spending really coming back, maybe how does that affect you? And maybe vice versa, if we saw unemployment rise, you know, how does Upbound Group fare? Yeah, I think it's the resilience in the durability of the model when if we get more, Uh...

B: Demand for household furnishings come back that overall I see that as very positive for.

Mitch Fadel: Uh... At one end of the spectrum, maybe as the economy improves, you can start adding back some of what Fahmi just referred to from an underwriting standpoint, the bottom. You can add some more back to the bottom. Plus, you get longer retention, especially on the rental center side when people have more money, so it helps the portfolio. So you can drive there.

B: For rent a center and for Sema or as people start moving again interest rates come down and people start moving again people bank starter homes use lease to own a lot.

Mitch Fadel: Eventually, maybe you'll lose some of the trade down on the other end, but that's the resilience, how it just goes back and forth like a swing a little bit, and you end up strong in any economic environment. But I will say, you know, things like demand for household furnishings coming back, that overall, I see that as very positive for Rent-A-Center and for ACIMA. Or, as people start moving again, interest rates come down, and people start moving again. You know, people buying starter homes use lease-to-own a lot, especially in that starter home category. And, of course, those are the ones most affected by these mortgage rates.

B: Especially at that starter home category and of course those are the ones. Most affected by these mortgage rates. So as people. So not just home depot and Lowe's and I'll start benefiting from people moving around again. It's also it's also our industry with the household furnishings and even appliances. So.

Mitch Fadel: So as people, it's not just Home Depot and Lowe's that'll start benefiting from people moving around again. It's also our industry with household furnishings and even appliances. I think there's plenty of tailwinds to think about, and very few on the headwind side, because again, even when things get a whole lot better, we've still performed just the, not just us, but the industry will still perform because of the reasons I've already said, and if it gets a lot worse... to your point about it, unemployment could skyrocket again. We've certainly been through those cycles, and we' Sounds good!

B: I think there's I think there's just.

B: Plenty of tailwind to think about.

B: Very few on the headwind side because again.

B: When things get a whole lot better.

B: We still performed just.

B: Not just not just us, but the industry will still perform because of the reasons I've already.

Speaker Change #104: He said.

B: And then if it gets a lot worse.

B: To your point about unemployment could skyrocket again, we've certainly been through those cycles and we've done fine because.

B: Can you get even more trade down.

B: <unk>.

Speaker Change #107: Obviously, we're pretty optimistic.

Mitch Fadel: Thank you, thanks so much, Mitch. Thanks, Brad.

Speaker Change: Thanks, so much.

Brett: Thanks, Brett.

Derek Sommers: One moment for the next question. The next question comes from Derek Salmer's with Jeffries; your line is open.

Speaker Change #110: One moment for the next question.

Brad Thomas: Thanks so much, Mitch. Thanks, Brad. One moment for the next question. The next question comes from Derek Summers with Jeffreys. Your line is open. Hi, good morning, everyone.

Speaker Change #103: The next question comes from Derek <unk> with Jefferies. Your line is open.

Derek Sommers: Hi, good morning, everyone. What's the typical GMB ramp time when you onboard with a new retail partner? The ramp time, it's both. It depends on the industry a little bit and how big they are. The bigger they are, it ramps up a little slower because they might put it in a few sources to start and make sure everything's working and so forth.

Derek Summers: What's the typical GMB ramp time when you are on board with a new retail partner? The ramp time, you know, probably depends on the industry a little bit and how big they are. You know, the bigger they are, it ramps up a little slower because they might put it in a few stores to start and make sure everything's working and so forth. If you've got a two-store chain... And there may be very little ramp-up, I mean, very little time, you know, by the second month you might be at your run rate. So I think it... [inaudible] It's still only a couple of months to ramp up staff versus unstaffed. The staffed stores will ramp up faster than the unstaffed. That's right. A great, thankful, helpful color there.

Derek Summers: Hi, good morning, everyone.

Speaker Change #107: The typical GMB ramp time, when you onboard with the new retail partner.

Derek Summers: The ramp time.

Derek Summers: Yes.

Speaker Change #110: Dispose it depends on.

B: And the industry, a little bit and how big they are.

B: The bigger that the bigger they are it ramps up a little slower because they might put it in a few sources start and make sure everything is working and so forth.

Mitch Fadel: If you've got a two-store chain, there may be very little ramp up. You know, by the second month you might be at your run rate, so I think it kind of depends, but it doesn't take a long time. Let me just say that. It's a couple of months; even on the big ones, it's still only a couple of months to ramp up in staff for some staff, so the staff stores will ramp up faster than the ones that are.

Speaker Change: <unk> got a.

Speaker Change: Two store chain.

Speaker Change: There may be very little ramp up yes, I mean very little time.

B: By the second month, you might be at your run rate So I think it.

B: Okay.

Speaker Change #123: Kind of depends but it doesn't take a long time, let me just let me just say that it is a couple of months even on the big ones.

B: Still only a couple of months to ramp up in staff for Sun staffed the staff stores, we'll ramp up faster than the uncertain right now.

Mitch Fadel: Thank you. Great, thankful, helpful color there.

B: All right.

B: Great. Thanks.

Speaker Change #110: Helpful color there and then just one quick one on the rack store count.

Mitch Fadel: And then just one quick one on the REX store count. How should we think about store count moving forward? Was most of that kind of consolidation exercise concentrated in this quarter? And how do you think about same store sales trends moving forward? Yeah, good question. Yeah, I think it was concentrated in that quarter. We don't see it. We don't see a lot more this year.

Mitch Fadel: And then just one quick one on the rack store count.

Mitch Fadel: How should we think about the store count moving forward? Was most of that kind of consolidation exercise concentrated in this quarter? And how do you think about the same store sales trends moving forward? Yeah, good question. Yeah, I think it was concentrated in that quarter. We don't see it. We don't see a lot more this year, of course. We're always looking to optimize. We've open stores too. And so it all depends on the market. But no, we don't, we don't see that from an ongoing standpoint. You know, we had, we had, you know, through the pandemic and with the stimulus money, we didn't have any underperforming. So first.

Speaker Change #104: How should we think about store count moving forward.

Speaker Change #104: Most of that kind of consolidation exercise concentrated in this quarter.

Speaker Change #105: How do you think about same store sales trends moving forward.

Speaker Change #110: Yes. Good question, Yes, I think it was concentrated in that quarter. We don't see we don't see a lot more this year of course, we're always looking to optimize we've opened stores too.

Mitch Fadel: Of course, we're always looking to optimize. We've opened stores, too. And so it all depends on the market.

Speaker Change #110: And so it all depends on the market, but no. We don't we don't see that from an ongoing standpoint, we had we had.

Mitch Fadel: But no, we don't, we don't see that from an ongoing standpoint. You know, we had, we had, through the pandemic and with the stimulus money, we didn't have any underperforming stores. So as we looked at here, three years away from that, the majority of what we've closed and only have two or three percent of our stores left, but the majority were underperforming. I'd also want to point out that the majority of those stores, almost all of them, were less than three miles from another Rent-a-Center. Up to 90% of them were less than three miles from another Rent-a-Center, and they were underperforming.

B: Through the pandemic there was a seamless money we didn't have any underperforming stores. So as we looked at it here.

Mitch Fadel: So, as we looked at here, three years away from that, that in the majority of what we've closed is only a two or three percent of our stores. But the majority we're underperforming; we don't see that from an ongoing standpoint. You know, we had, we had, you know, through the pandemic and with the stimulus money, we didn't have any underperforming. So first. So, as we looked at here, three years away from that, that in the majority of what we've closed is only a two or three percent of our stores. But the majority we're underperforming. I also want to point out that the majority of those stores, almost all of them, were less than three miles from another rent center.

Speaker Change #110: Three years away from that that.

B: And the majority of what we've closed.

Speaker Change #110: Only.

Speaker Change #110: 2% to 3% of our stores, but the majority of our underperforming I'd also want to point out that the majority of those stores almost all of them with it with less than three miles from another rent a center.

Mitch Fadel: Um, um, like 90% of them were less than three miles from another rent center. So, and they were underperforming. So we're able to still serve those customers. You know, we run reports that the off steam Anthony and his team look at every week where we take the customers out those close stores when we put them in the next closest store. We run the reports. To see how, how, what our retention level is, those customers, as we put them in different stores in the report, is just looking at it the other day, the weekly report where and the stores in the report right now, because it goes back two years, the stores on the report right now that we've closed average seven months of closure.

B: Obviously like 90% of them were less than three miles from another rent a center so.

B: And there are underperforming so we're able to still serve those customers. We run reports that the ops team Anthony and his team look at every week, where we take the customers out of those closed stores when we put them in the next closest so we run the reports to see how what our retention level is for those customers.

Mitch Fadel: So we're able to still serve those customers. We run reports that the operations team, Anthony and his team, look at every week, where we take the customers out of those closed stores, and when we put them in the next closest store, we run the reports to see what our retention level is for those customers as we put them in different stores. And the report, I was just looking at it the other day, the weekly report, where And the stores in the report right now, because it goes back two years, the stores on the report right now that we've closed average seven months of closure.

Speaker Change #116: As we put them in different sourcing to report it is just looking at it the other day.

B: Weekly report.

Mitch Fadel: And we're over 80% retention rate of those customers. So it's pretty high retention when you get rid of the override of a store and keep that level of customers even seven months later on, on average.

B: And the stores and therefore right now because it goes back two years the stores on the report right now that we've closed averaged seven months of closure.

Mitch Fadel: Uh, and we're over 80% retention of those customers. So it's pretty high retention when you get rid of, get rid of the over rate of a store and keep that level of customers, even seven months later on on average.

B: And we're over 80% retention of those customers. So it's a pretty high retention. When you can get rid of get rid of the overhead of our stores and keep that debt level of customers. Even seven months later on on average so.

Mitch Fadel: So, uh, but the short answer to your question is going forward. We don't see a lot more that we're in positive territory seems ourselves. We see that continuing through the through the rest of the year. We don't see anything bringing that bringing that back down to negative territory. Uh, so we can continue to expect that I'll be low single digits. You know, it's not we're not going to start putting the same numbers on the board if we're in the center, but I think, um, it will still be low single digits. Same sort of sales growth as we move forward.

Mitch Fadel: So, the short answer to your question is, going forward, we don't see a lot more of that. We're in positive territory for same-store sales. We see that continuing through the rest of the year. We don't see anything bringing that back down to negative territory. So we can continue to expect that. I'll be in low single digits, you know.

B: But the short answer to your question is going forward, we don't see a lot more of that.

B: We're in positive territory same store sales, we see that continuing through through the rest of the year, we don't see anything bringing that bringing that back down to negative territory.

B: So we can continue to expect that it will be low single digits.

Mitch Fadel: It's not, we're not going to start putting the SEMA numbers on the board if we're in the center. But I think it'll still be low single-digits same-store sales growth as we move forward. Great. Thanks for that. That's all for me.

Speaker Change #110: Im going to start putting the sema numbers on the board at rent a center, but I think.

B: It's still a low single digit same store sales growth as we move forward.

Mitch Fadel: Great. Thanks for that.

Speaker Change #103: Great. Thanks for that that's all for me.

Derek Sommers: That's all for me.

Operator: Thanks there.

Derek Summers: Thanks, sir. One moment for the next question. The next question comes from John Rowan with Jannie Montgomery Scott. Your line is now open.

Derek Summers: Thanks Derek.

John Rowan: One moment for the next question.

Speaker Change #113: One moment for the next question.

John Rowan: The next question comes from John Rowan with Janie Montgomery Scott. Your line is now open.

Speaker Change #102: The next question comes from John Rowan with Janney Montgomery Scott. Your line is now open.

Mitch Fadel: Hey guys. Uh, good morning. Um, so obviously you can see the trade down pretty clearly in the seem of business with the applications coming, you know, down from the waterfall. But are you seeing the same type of trade-down benefit in the core rack business that you're seeing from, you know, whatever might be people tightening up above you because of, you know, impending or recently enacted credit card regulations. Yeah, good question, John. It's certainly not a directive, right? You don't really see it; it takes a little longer because the customer's not in a waterfall at a retailer or online where they got denied, and then their next option would be at least.

John Rowan: Hey, guys, good morning. So obviously, you can see the trade down pretty clearly in the Acima business with the applications coming, you know, down from a waterfall. But are you seeing the same type of trade-down benefit in the core rack business that you're seeing from, you know, whatever it might be people tightening up above you because of, you know, impending or recently enacted credit card regulations? Yeah, good question, John. It's certainly not as direct at Rent-A-Center, right? You can't; you don't really see it.

John Rowan: Hey, guys. Good morning. So obviously you can see the trade down pretty clearly and the CMO business.

John Rowan: So what's the applications coming down from a waterfall, but are you seeing the same type of trade down benefit in the core <unk> business that youre seeing from whatever it might be people tightening up above you because of impending.

Speaker Change #124: Ah recently enacted credit card regulations.

John Rowan: Yeah. Good question, John It's certainly not as director of Retina <unk> you can't you don't really see it.

Mitch Fadel: It takes a little longer because the customer's not in a, in a, waterfall at a retailer or online where they get denied, and then their next option would be a lease. So it takes longer. Yeah, I'd say positive same-source sales will tell us we're seeing a little. Certainly, the Vantage scores don't have the increase like we're seeing at Acima, things like that. But I think that we're seeing a little bit; it's just a lot slower happening.

Speaker Change #102: It takes a little longer because the customer is not any any in a waterfall at a retailer or online where they got denied and then the next option would be at least.

Mitch Fadel: So it takes longer. I'd say positive; same sort of sales, so it tells us we're seeing a little. Certainly, the advantage score is don't have the increase like we're seeing at a seam and things like that. But I think that we're seeing a little bit. It's just a lot slower happening, and it probably picks up over. We don't have it in our forecast for a lot of trade down would pick up on the rent center side going forward, but it probably picks up. It just takes a little longer because it's not that direct sale like at a retail partner the way it seems it does.

Speaker Change #102: So it takes longer.

Speaker Change #102: Yes, I would say positive same store sales will tell us we're seeing a little.

Speaker Change #126: Certainly the advantage scores don't have the increased like we're seeing at a siem or things like that.

Speaker Change #102: But I think we're seeing a little bit it's just a lot slower happening in <unk>.

Mitch Fadel: And, you know, it probably picks up over time. We don't have it in our forecast that a lot of trade down would pick up on the Rent-A-Center side going forward, but it probably picks up, it just takes a little longer because it's not that direct sale, like at a retail partner, the way Acima does it. But I mentioned it earlier, too, John, I think there are some opportunities. There are some store closures out there where Rent-A-Centers are, and they're in our neighborhoods, you know, some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks.

Speaker Change #102: Probably picks up over we don't have it in our forecast with a lot of trade downward pick up on the rent a center side going forward, but it probably picks up it just takes a little longer because it's not that direct sale like at a retail partner the way it seem it doesn't but I mentioned it earlier too John I think I think there's some opportunities there as some store closures out there where rent a center.

Mitch Fadel: But I mentioned it earlier too, John. I think there's some opportunities. There's some store closures out there where rent centers are in our neighborhoods, you know, some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks. We're in the same neighborhood, so we see that only as an opportunity. Thankfully, on the a seam aside, we don't do business with one of those two, so it's nothing but positive does.

Speaker Change #102: <unk>.

John Rowan: And they are in our neighborhood.

Speaker Change #139: Some of the ones that the two larger chains nationwide that announced closures in the last couple of weeks. We're in the same neighborhood. So we see that only as an opportunity and thankfully on the <unk> side, we don't do business with either one of those two so it's nothing but positive to us okay I'm going to ask one question on the CFPB.

Mitch Fadel: We're in the same neighborhood, so we see that only as an opportunity, and thankfully, on the ASEMA side, we don't do business with either one of those two, so it's nothing but positive for us. Okay, now I'm going to ask one question about the CFPB, a broad question. If you can't answer it, I won't hold it against you, but I'm just trying to understand the main tenant of your lawsuit against them. I'm assuming, it's an assumption, that it's based on the legal definition of a lease in Dodd-Frank and whether or not the CFPB actually has jurisdiction over it.

Mitch Fadel: Okay, I'm going to ask one question on the CFPB broad question. If you can't answer it, I won't hold it against you, but I'm just trying to understand the main tenant of your lawsuit against them. I'm assuming in some assumptions that it's, you know, the legal definition of a lease in Dodd-Frank and whether or not the CFPB actually has jurisdiction over it. Is that correct? Well, as I said in my prepared comments, and you know what we think there, we see them trying to do is expand our authority and you serve the state regulatory framework that governs our industry, and that's really just of it.

Speaker Change #124: Rod question, if you can't answer it I wont hold it against you, but I'm just trying to understand.

Speaker Change #128: The main tenant of your lawsuit against them I am assuming thats an assumption that it's.

Speaker Change #126: Based on.

Speaker Change #124: The legal definition of a lease in Dodd, Frank and whether or not the CFO. He actually has jurisdiction over eight is that correct.

Mitch Fadel: Is that correct? Well, as I said in my prepared comments and, You know, what we see them trying to do is expand their authority and usurp the state regulatory framework that governs our industry, and that's really just... Okay. All right. Thank you. Thanks, John. One moment for our next question. Also, as a reminder, to ask a question, you will just need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. The next question comes from the line of Carla Cusela.

Speaker Change #121: Well as I said in my prepared comments.

Speaker Change #117: We think we.

Speaker Change #126: See them trying to do is expand our authority in usurped the state regulatory framework with governance, our industry and that's really the gist of it okay alright. Thank you.

Mitch Fadel: Okay, all right, thank you.

John Rowan: Thanks, John. One moment for our next question.

John Rowan: Thanks, John.

Speaker Change #126: One moment for our next question.

Operator: Also, as a reminder to ask a question, you will just need to press star 11 on your telephone and wait for your need to be announced. To withdraw your question, please press star 11 again.

Speaker Change #125: Also as a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced.

Speaker Change #113: Your question. Please press star one again.

Carla Cusella: The next question comes from the line of Carla Cusella for the JP Morgan; the line is open. Hi, thank you. You talked about the store closures, and you know, it sounds like you're getting good transfer retention to your other stores. Have you given the number of how many more you see opportunities to close, and if there's any specific kind of regions where they're concentrated? No, Carla, we haven't. We don't really see any more this year; now whether it be one or two sprinkled in, of course. I mean, we lose leases and markets change, and so forth, and we open a few sources here and there as we see the opportunity as well.

Speaker Change #102: The next question comes from the line of Carla Casella.

Carla Cusela: For JP Morgan, your line is open. Hi, thank you. You talked about the store closures, and it sounds like you're getting good transfer retention to your other stores. Have you given a number of how many more you see an opportunity to close and if there's any specific kind of regions where they're concentrated? No, Carla, we haven't. We don't really see any more this year. Now, whether it be one or two sprinkled in, of course.

Speaker Change #130: With Jpmorgan your line is open.

Carla Casella: Hi, Thank you.

Carla Casella: You talked about the store closures and it sounds like Youre getting good transfer retention to your other stores have you given the number of how many more you see opportunity to close and if there's any specific.

James: James where they're concentrated.

James: No. We haven't we don't we don't really see.

James: Any more this year now whether it be one or two sprinkled in there of course, I mean, we lose leases and markets change and so forth.

Mitch Fadel: I mean, we lose leases and markets change and so forth, and we open a few stores here and there as we see the opportunity as well. So, no, we haven't given that number away, but as I mentioned, we don't see any more on the near horizon. Anyway, that was like we did a review of just about every store in the system or, certainly, every underperforming store in the system. And also, to answer your question, no, it wasn't regional. It was where we had an underperforming store and another store within three miles or less than three miles, the vast majority. But no, there wasn't any one region of the country or anything like that.

James: <unk>.

Speaker Change #102: And we open we opened a few stores here and there as we see the opportunity as well. So so no we haven't given that number but as I mentioned, we don't really see any we don't see any more on that on the near Horizon Anyhow that was like we.

Mitch Fadel: So no, we haven't given that number, but as I mentioned, we don't really see any, we don't see any more on the near horizon. Anyhow, that was like we did a review of just about every store in the system or certainly every underperforming store in the system, and also to answer your question. No, it wasn't regional. It was where we had an underperforming store and, you know, another store within three miles or less than three miles of the vast majority. So, but no, there was any one regional country or anything like that.

James: We did a review of just about every store in the system or certainly every underperforming store in the system.

James: Also to answer your question no it wasn't regional.

James: It was where we had an underperforming store in.

James: And.

Speaker Change #102: Another store within three miles or less than three miles.

Speaker Change #102: Vast majority so but no there wasn't any one region of the country or anything like that.

Carla Cusella: Okay, great. And then you talked about de-leveraging from both, you know, the dollar cashflow as well as paying down debt. It looks like you're really the only debt payable right now is the AVL. Can you just talk about it? Are you thinking about something more broadly than that, or maybe AVL and eventually address some of the term loan with your free cashflow?

Mitch Fadel: Okay, great. And then you talked about deleveraging from both, you know, EBITDA or cash flow as well as paying down debt. It looks like you're really the only debt payable right now is the ABL. Can you just talk about it? Are you thinking about something more broadly than that or maybe ABL and eventually address them as a term loan with your free cash flow? Yeah, hey, Carla, it's Fahmi.

Speaker Change #102: Okay, Great and then you talked about deleveraging from.

Speaker Change #102:

Speaker Change #102: Both.

Speaker Change #102: EBITDA and cash flow as well as paying down debt.

Speaker Change #126: It looks like you're really the only debt payable right now is the ABL can you just talk about how you're thinking about something more broadly than that or.

Speaker Change #126: Hey, Bill and eventually interest under the term loan with your free cash flow.

Fahmi Karam: Yeah, hey, Carla, it's family. Yeah, we have about 80 million outstanding on the AVL, but I think the de-leveraging comment is going to be a combination of, you know, paying down the AVL. We can also prepay the term loan, depending on where our cashflow is, but it'll be a combination of EBITDA growth as well as actually paying down some of that gross debt. Cashflow is obviously this year, the free cashflow number has been light compared to year-over-year. We fund the GMV growth at a SEMA and fund some of the technology advancements that Mitch mentioned, but we do see that as some of the growth changes throughout the rest of the year, we comp over some of the bigger numbers year-over-year.

Fahmi Karam: Yeah, we have about 80 million outstanding on the ABL, but I think the deleveraging comment would be more, it's going to be a combination of, you know, paying down the ABL, and we can also prepay the term loan, depending on where our cash flow is, but it'll be a combination of EBITDA growth, as well as actually paying down some of that gross debt. Cash flows, obviously, this year have been, the free cash flow number has been light compared to year over year, as we fund the GMV growth at Acima and fund some of the technology advancements that Mitch mentioned, but we do see that as some of the growth changes throughout the rest of the year, as we compare some of the bigger numbers year over year, we do expect free cash flow to increase in the second half of the year, and we guided for the Okay, great. That's helpful.

Speaker Change #124: Yeah, Hey, Hey, carloads.

Speaker Change #134: Yes, we have about $80 million outstanding on the ABL, but I think the deleveraging comment would be more it's going to be a combination of paying down. The ABL. We can also prepay the term loan depending on where our cash flow is but it'll be a combination of of <unk>.

Speaker Change #124: EBITDA growth as well as actually paying down some of that some of some of that gross debt.

Speaker Change #102: Cash flow is obviously this year have been the free cash flow number has been light compared to year over year as we fund the GMB growth at <unk>.

Speaker Change #146: Sema and fund some of the technology advancements that Mitch Mitch mentioned, but we do see that as some of the growth changes throughout the rest of the year as we comp over some of the bigger numbers year over year, we do expect free cash flow to increase in the second half of the year and we guided for the third quarter $60 million to $75 million.

Fahmi Karam: We do expect free cashflow to increase in the second half of the year, and we guided for the third quarter of 60 to 75 million. And part of that will go down to paying down debt.

Speaker Change #124: Part of that will go down to paying down debt.

Carla Cusella: Okay, great. That's helpful.

Speaker Change #124: Okay, Great. That's helpful. Thank you.

Operator: Thank you. I am showing no further questions at this time.

Speaker Change #124: I am showing no further questions at this time I would now like to turn it back to our Chief Executive Officer, Mitch Fadel for closing remarks.

Carla Cusela: Thank you. I am showing no further questions at this time. I would now like to turn it back to our Chief Executive Officer, Mitch Fadel, for closing remarks. Thank you, Elizabeth, and thank you to everyone who joined us today for an update on our second quarter and our outlook for the rest of the year. I'm really thankful for the collective efforts of my teammates and our merchants who helped deliver such strong GMV and same-source sales results for the quarter, and we're grateful for your interest and your support.

Mitch Fadel: I would now like to turn it back to our Chief Executive Officer, Mitch Fidel, for closing remarks. Thank you, Elizabeth, and thank you to everyone who joined us today for an update on our second quarter and our outlook for the rest of the year. I'm really thankful for the collective efforts of my teammates and our merchants who helped deliver such strong GMV and the same sort of sales results for the quarter.

Carla Cusela: And we look forward to updating you next quarter on our continued progress towards the goals we've outlined. So have a great day, everybody. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Mitch Fadel: Thank you Elizabeth and thank you to everyone, who joined US today for an update on our second quarter and our outlook for the rest of the year I'm really thankful for the collective efforts of my teammates and our merchants, who helped deliver such strong <unk> in the same store sales results for the quarter and we are grateful for your interest and your support and we look forward to updating you.

Mitch Fadel: And we're grateful for your interest and your support, and we look forward to updating you next quarter on our continued progress towards the goals we've outlined.

Mitch Fadel: Next quarter on our continued progress towards the goals we've outlined so have a great day everybody. Thank you.

Operator: So have a great day, everybody. Thank you.

Operator: Thank you for joining the participation in today's conference. This does include the program.

Speaker Change #146: Thank you for joining the participation in today's conference. This does conclude the program you may now disconnect.

Operator: You may now disconnect.